TMI Blog1983 (7) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... e is entitled to loss on such transfer ? 2. Whether the Appellate Tribunal's further finding to the effect that shares being movable property can be transferred as per the articles of the company and the transferee gets the right of ownership even if the transaction is not entered in the share registers of the company is sustainable in law ? The facts leading to the filing of this reference petition may briefly be stated: The assessee is an individual having income from a partnership firm, share dividends, sitting fees, etc. He sold some shares during the year which he held in the Bank of Madurai Ltd. and Rajendra Textile Mills Ltd. The said amount was considered for capital gains. He also sustained some loss in selling the shares of Al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cating the sale of shares, the sales cannot be taken to be complete and that, therefore, the assessee is not entitled to the set off of the " capital loss ". The assessee preferred an appeal before the Tribunal contending that as between the transferor and the transferee the transaction of sale of shares is complete and from the mere fact that the company has not recognised the transfer and made entries in the share registers, it cannot he said that the transfer is incomplete. The Tribunal, following the decision of the Supreme Court in Shelat v. Thakar [1975] 45 Comp Cas 43, held that the ownership of the shares stood transferred from the assessee to the purchasers, Messrs. Karumuthu Ramaswamy Finance (P.) Ltd., notwithstanding the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in Shelat v. Thakar [1975] 45 Comp Cas 43, the Supreme Court has clearly laid down that where, as between the transferor and the transferee, all formalities have been gone through, such as the execution of a document of transfer and the physical handing over of the shares by the transferor to the transferee, the shares should be taken to have been transferred to the transferee, though until the transfer of shares is registered in the company's books in accordance with the company law, the transfer could not enable the transferee to exercise rights of a shareholder vis-a-vis the company. The facts of the case before the Supreme Court were more or less similar to the case on hand. In that case, there was a registered gift deed purportin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and nothing was left to be done so far as the vesting of such a right in the donee was concerned and that the actual transfers in the registers of the companies concerned, which were necessary to enable the donee to exercise the rights of a shareholder, were mere enforcement of that right, and the mere fact that such transfers had to be recorded in accordance with the company law did not detract from the completeness of what was donated. According to the said decision of the Supreme Court, if the transferor has transferred the right to get the share certificates from the company in the name of the donee, then, as between the transferor and the transferee, the transfer is complete, though the transferee cannot exercise his rights as sharehol ..... X X X X Extracts X X X X X X X X Extracts X X X X
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