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TMI Blog1973 (9) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... Prasad was the karta. The family owned certain shares of Lord Krishna Sugar Mills Ltd. (hereinafter referred to as " the company "). The shares were registered in the name of the karta. By a deed dated July 28, 1962, a partial partition was carried out in the family and shares of the company were divided amongst the various members. By letter dated August 6, 1962, the assessee applied to the company for the transfer in his name of the shares allotted to him. As the shares were under attachment in recovery of certain income-tax dues, the transfer was not immediately effected. The shares were actually transferred in the name of the assessee on July 2, 1963, after they were released from attachment and after taking from the assessee the necess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee was entitled to get benefit of tax deducted at source from dividends of Lord Krishna Sugar Mills Ltd.? " Now the assessee during the relevant years was not a shareholder of the company for purposes of the Companies Act inasmuch as the shares had not been transferred in his name. He was a beneficial owner, the shares having been allotted to him on partition. Under the Indian Income-tax Act, 1922, the tax deducted at source from dividend could only be allowed to a registered shareholder and not to a beneficial owner thereof, even though such dividends were assessable in the latter's hands : See Howrah Trading Company v. Commissioner of Income-tax and Income-tax Officer v. Arvind N. Mafatlals. But the position is materially differen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. This rule so far as material for our purposes runs : " 30A. Credit for tax deducted at source to a person other than the shareholder in certain circumstances.--(1) Subject to the provisions of sub-rule (2), where the dividend on any share is assessable as the income of a person other than the shareholder, any deduction made in accordance with section 194 and paid to the Central Government, shall be deemed to be a payment of tax on behalf of, and the credit in respect thereof shall be given to, such other person in the circumstances specified below, namely :-......... (ix) Where the shares have been sold or otherwise transferred by the registered shareholder and action for registering the transfer in the name of the purchaser or othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee had not complied with section 108 of the Companies Act and hence he was not entitled to the credit for the tax deducted at source. His contention is that the shares should have been transferred in the name of the assessee in the relevant previous year or at any rate action should have been taken for the transfer of the shares to his name in accordance with section 108 of the Companies Act within the relevant previous year and this not having been done, the assessee was not entitled to the benefit of the tax deducted at source. We find no merit whatsoever in this contention. Neither section 199 nor rule 30A requires that the shares should be transferred in the name of the transferee within the previous years nor indeed it is necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. It is clear that the delay in transfer was not for want of necessary steps but because of the attachment of the shares by the income-tax department. The next contention that a duly stamped and executed instrument of transfer signed by the transferor and by or on behalf of the transferee, as required by section 108 of the Companies Act, had not been filed, also cannot be accepted in view of the finding of the Tribunal that no such objection was raised by the income-tax department before it. This is clear from the following observations of the Tribunal : "Besides there has been no suggestion from the revenue that the transferor, the Hindu undivided family, and the transferee, the assessee, did not combine in the execution of the tra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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