TMI Blog1960 (12) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... JUDGMENT The judgment of the court was delivered by S. K. DAS, J.--This is an appeal on a certificate of fitness granted by the High Court of Calcutta under section 66A(2) of the Indian Income-tax Act, 1922. The assessee, Provat Kumar Mitter, is the appellant before us. He was a registered holder of 500 ordinary shares of the Calcutta Agency Ltd. By a written instrument dated January 19, 1953, he assigned to his wife, Ena Mitter, the right, title and interest to all dividends and sums of money which might be declared or might become due on account or in respect of those shares for the term of her natural life. We may read here the material portion of the instrument. " This Deed Witnesseth that for effecting the said desire and in consideration of the natural love and affection of the Settlor for the Beneficiary the Settlor as the beneficial owner assigns unto the Beneficiary the right, title and interest to every dividend and sum of money which may be declared or become due and payable on account of or in respect of the said shares (not being the price or value thereof) and further hereby covenants with the Beneficiary to hand over and or endorse over to the Beneficiary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both the aforesaid contentions and dismissed the appeal. In a further appeal to the Income-tax Appellate Tribunal, the assessee again relied on the third proviso to section 16(1)(c) of the Act and the departmental representative urged the same two contentions plus a new one to the effect that the deed by which the dividend had been transferred was altogether invalid inasmuch as it was an unregistered instrument and, therefore, no valid transfer of the dividend income had been effected by it. The Tribunal rejected the Department's contention that the third proviso was in conflict with the main provisions of section 16(1)(c) or the scheme of the Act. As to the second contention that the transfer of the dividend income was a mere application of it by the assessee after it had accrued to him, the Tribunal apparently expressed no opinion. It gave effect, however, to the third contention of the Department, namely that the deed being an unregistered instrument did not operate as a valid transfer of the dividend income in favour of the assessee's wife. Both the assessee and the Commissioner then moved the Tribunal to refer to the High Court the questions which had respectively been d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could refer to the High Court any question of law which arose out of its order, but it was not open to the Tribunal to refer a question which did not so arise. We are unable to accept the contention that the question did not arise out of the Tribunal's order. Indeed, it is true as we have stated earlier, that the Tribunal did not state its specific finding on this question; but in the statement of the case drawn up by the Tribunal under section 66 it has stated that though no specific finding was given, the question was raised by the Department and by implication was decided against the respondent. In its application to the Tribunal for a reference, the present respondent specifically mentioned the question as one decided adversely to it and though the appellant submitted that the question did not arise, the Tribunal held that the question did arise out of its order. No objection appears to have been taken in the High Court to the reference made by the Tribunal on the three questions including the one now under consideration before us. In these circumstances, it is not open to the appellant to contend now that the question did not arise out of the Tribunal's order. We must, theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r or make over in future, every dividend and sum of money which may be declared or become due and payable on account or in respect of the shares held by the assessee, to his wife during her lifetime ; the other covenants are ancillary in nature and subserve this main object of the contract. The assessee did not assign the shares and, therefore, retained the right to participate in the profits of the company ; he did not part with that right. What the contract provided for was merely this : the beneficiary was given the right to receive from the assessee every dividend and other sum of money which may be declared or become due and payable in respect of the shares. If this is the true construction of the document, then it is clear to us that the answer given by the High Court to the question referred to it is correct. The High Court rightly pointed out that the company paying the dividend can pay it only to the registered shareholder or under his orders (see Howrah Trading Co. Ltd. v. Commissioner of Income-tax); therefore, section 16(1)(c) of the Income-tax Act was not attracted nor the third proviso thereto and the income continued to accrue to the assessee, but was thereafter paid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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