Law:

Section:

Section 4 of Income-tax Act, 1961 - Income - Chargeable as Merely because a person may have purchased or be in receipt of shares, in absence of shares being registered in his name in books of account of company, such a person is not entitled to receive dividend and dividend cannot be assessed in his hands [A/Y : 1994-95] Merely because a person may have purchased or be in receipt of shares, in the absence of the shares being registered in his name in the books of account of the company, such a person is not entitled to receive the dividend and dividend cannot be taxed in his hands. The dividend has to be paid by the company in the name of the registered shareholders and it is the registered shareholders alone who can claim the dividend under section 27 of the Securities Contracts (Regulation) Act. JUDGMENT F.I. Rebello, J.- The Revenue has preferred this appeal on the following questions: "(i)Whether, on the facts and in the circumstances of the case and in law, the Income-tax Appellate Tribunal was right in law in holding that the de jure owner of the shares alone is entitled to the dividend declared by a company, though the assessee-company might be de facto owner of shares but had no right to receive the dividend from the company unless it is the registered shareholder of the company?. (ii)Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding that the dividend of Rs. 16,84,150 has not accrued to the assessee and thereby holding that such dividend income could not form part of the total income of the assessee? (iii)Whether, on the facts and circumstances of the case, the Income-tax Appellate Tribunal was right in law, in accepting the assessee's submission, that even though the amounts were paid for acquiring the shares, shares have not been delivered to the assessee-company and the change in ownership of the shares have not been registered and notified and, therefore, the assessee's name did not appear in the share registers of the respective companies on the record date and, therefore, it could not have received the dividend at all?" This appeal is in respect of the assessment year 1994-95.…

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