TMI Blog2012 (2) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... 2nd December, 2010 passed by the Tribunal in the case of Standipack Pvt. Ltd. in ITA No. 3791/Del/2010 and cross objection No. 293/Del/2010 pertaining to the assessment year 2006-07. 2. By the impugned order, the Tribunal has held that the provision of deemed dividend in section 2(22)(e) of the Act was not applicable as the respondent/assessee was not the beneficial owner of the shares of M/s. Wecan Services Limited. It has been held that Saumya Meattle was the beneficial owner of the said shares and therefore, the requirement of Section 2(22)(e) was not satisfied. The tribunal has held that the requirement is that the shareholder should also be the beneficiary owner of the shares. 3. M/s. Wecan Services Ltd. had advanced Rs.70 lacs to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e dividends under Section 2(6A)(e) of the Act; the HUF could not be considered to be a 'shareholder' under Section 2(6A)(e) of the Act and hence, loans given to the HUF will not be considered as loans advanced to "shareholder" of the company and could not, therefore, be deemed to be its income. The apex Court further held that when the Act speaks of shareholder it refers to the registered shareholder. 21. The aforesaid decision of the apex Court in the case of C.P. Sarathy Mudaliar (supra) has been followed by the apex Court in the case of Rameshwarlal Sanwarmal v. CIT (supra). In this case, the company advanced the loans to the assessee HUF who was the beneficial owners of the shares in the company, but the shares were registered in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the meaning of Section 2(6A)(e). 22. It is thus clear from the aforesaid pronouncement of the Hon'ble Supreme Court that to attract the first limb of the provisions of Section 2(22)(e) the payment must be to a person who is a registered holder of shares. As already mentioned the condition under the 1922 Act and the 1961 Act regarding the payee being a shareholder remains the same and it is the condition that such shareholder should be beneficial owner of the shares and the percentage of voting power that such shareholder should hold that has been prescribed as an additional condition under the 1961 Act. The word "shareholder" alone existed in the definition of dividend in the 1922 Act. The expression "shareholder" has been interpreted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of Section 2(22)(e) of the Act. In the 1961 Act, Section 2(22)(e) imposes a further condition that the shareholder has also to be beneficial owner of shares (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits) holding not less than ten per cent of the voting power. It is not possible to accept the contention of the learned Departmental Representative that under the 1961 Act there is no requirement of a shareholder being a registered holder and that even a beneficial ownership of shares would be sufficient. 24. The expression "shareholder being a person who is the beneficial owner of shares" referred to in the first limb of Section 2(22)(e) refers to both a registered sharehol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egistered shareholder. This expression shareholder found in the 1961 Act has to be therefore construed as applying only to registered shareholders. It is a principle of interpretation of statures that once certain words in an Act have received a judicial construction in one of the superior courts, and the legislature has repeated them in a subsequent statute, the legislature must be taken to have used them according to the meaning which a court of competent jurisdiction has given them. 6.1 In the 1961 Act, the word shareholder in section 2(22)(e) is followed by the following words being a peson (sic) who is beneficial owner of shares . This expression only qualifies the word shareholder and does not in any way alter the position that ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
