# l959 March 26. 44S StJPREM:rn COURT R:rnPoR'l'S [1959] Supp. MESSRS. HOWRAH TRADING CO., LTD v. THE COMMISSIONER OF INCOME-TAX, CALCUTTA

- **Citation:** [1959] Supp. 2 S.C.R. 448
- **Court:** Supreme Court of India
- **Decided:** 1959
- **Case number:** Civil Appeal No. 65 of 1956
- **Bench:** B. P. Sinha, J. L. Kapur, M. HrnAYATULLAH
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/l959-march-26-44s-stjprem-rn-court-r-rnpor-l-s-1959-supp-messrs-howrah-trading-1685
- **Pages:** 11

## Headnote

Income-tax-Assessee acquiring shares by blank transfcrsReceipt of dividend on s"ch shares-If assessee entitled to grossing
"P of dividend income and to credit for tax deducted at sourceIndian Income-tax A,ct, r922 (XI of r922), ss. r6(2) and r8(5).
The assessee acquired shares in~ certain companies under
"blank transfers" without getting the transfers registered with
the companies and it received dividends in respect of these
shares. It claimed-that the dividend income should be grossed
up under s. 16(2) Income-tax Act and that it should be allowed
credit under s. 18(5) for the tax deducted at source on the
dividend in the hands of the companies.
Held, that, the assessee was not entitled to the benefits of
ss. 16(2) and 18(5) as its name was not in the register of members
of the companies. The benefit of s. 18(5) could only go to a
shareholder; and a shareholder in that section meant the same
thing as in the Indian Companies Act, 1913, i. e., a "member"
having his name on the register.
The scheme of the Indian Companies Act, 1913, shows. that
the words
11 member", "shareholder" and "holder of a share"
have been used inter-changeably.
The words "holder of a
share" are really equal to the word "shareholder" and the
expression" holder of a share" denotes only a person who, as a
shareholder, has his name entered on the register of members.
In re Wala Wynaad Indian Gold Mining Company, (1882)
21 Ch. D. 849, Shree Shakti Mills Ltd. v. Commissioner of Incometax, [1948] 1fJ I.T.R. 187, ]aluram Bhikulal v. Commissioner of
Income-tax, 11952) 22 I.T.R. 490, Arvind N. Mafatlal v. Incomctax Officer, [1957J 32 I.T.R. 350, Bikaner Trading Co. v. Commissioner of Income-tax, [1953) 24 LT.~: 419, referred to.
A company when it pays income-tax does not do so on
behalf of the shareholders, but the shareholders get the benefit
of such payment. The rates of income-tax applicable to the
company are, in most instances, higher than the rates applicable
to individual shareholders and by the process of grossing up the
recipient of the dividend gets some benefit.
Cull v. Inland Revenue Commissionors, (1940) A.C. 51 and
Inland Revenue Commissioners v. Blott, (r92r) 2 A.C. lJl, referred to.
(2) S.C.R.
StJPRF.lM~ COURT REPORTS
449
In blank transfers the transfer deed signed by the transferor
r959
is handed over with the share scrip to the transferee who may M
H
1
complete the transfer by entering his name and applying to the 7' esds~s. C owLra'
f
. t
t"
f h.
Th
I
ra ing
o.
td.
company
or reg1s ra !On o
1s name.
e company on y
'
recognises those persons whose names are on the register of Th
v.. .
members and they alone are legally entitled to the dividend
• Commissioner
declared. In the case of a blank transfer equities exist between
of Income-tax,
Calcutta
the transferor and the transferee and the transferee has a right
to claim the dividend from the transferor who holds it in trust
for him, but the company is only liable to the transferor and not
to the transferee. Though the transferee is clothed with an
equitable ownership he is not a full owner, since the legal
interest vis-a-vis the company still outstands in the transferor.

## Text

l959
March 26.
44S
StJPREM:rn COURT R:rnPoR'l'S [1959] Supp.
MESSRS. HOWRAH TRADING CO., LTD.
v.
THE COMMISSIONER OF INCOME-TAX,
CALCUTTA
(B. P. SINHA, J. L. KAPUR and
M. HrnAYATULLAH, JJ.)
Income-tax-Assessee acquiring shares by blank transfcrsReceipt of dividend on s"ch shares-If assessee entitled to grossing
"P of dividend income and to credit for tax deducted at sourceIndian Income-tax A,ct, r922 (XI of r922), ss. r6(2) and r8(5).
The assessee acquired shares in~ certain companies under
"blank transfers" without getting the transfers registered with
the companies and it received dividends in respect of these
shares. It claimed-that the dividend income should be grossed
up under s. 16(2) Income-tax Act and that it should be allowed
credit under s. 18(5) for the tax deducted at source on the
dividend in the hands of the companies.
Held, that, the assessee was not entitled to the benefits of
ss. 16(2) and 18(5) as its name was not in the register of members
of the companies. The benefit of s. 18(5) could only go to a
shareholder; and a shareholder in that section meant the same
thing as in the Indian Companies Act, 1913, i. e., a "member"
having his name on the register.
The scheme of the Indian Companies Act, 1913, shows. that
the words
11 member", "shareholder" and "holder of a share"
have been used inter-changeably.
The words "holder of a
share" are really equal to the word "shareholder" and the
expression" holder of a share" denotes only a person who, as a
shareholder, has his name entered on the register of members.
In re Wala Wynaad Indian Gold Mining Company, (1882)
21 Ch. D. 849, Shree Shakti Mills Ltd. v. Commissioner of Incometax, [1948] 1fJ I.T.R. 187, ]aluram Bhikulal v. Commissioner of
Income-tax, 11952) 22 I.T.R. 490, Arvind N. Mafatlal v. Incomctax Officer, [1957J 32 I.T.R. 350, Bikaner Trading Co. v. Commissioner of Income-tax, [1953) 24 LT.~: 419, referred to.
A company when it pays income-tax does not do so on
behalf of the shareholders, but the shareholders get the benefit
of such payment. The rates of income-tax applicable to the
company are, in most instances, higher than the rates applicable
to individual shareholders and by the process of grossing up the
recipient of the dividend gets some benefit.
Cull v. Inland Revenue Commissionors, (1940) A.C. 51 and
Inland Revenue Commissioners v. Blott, (r92r) 2 A.C. lJl, referred to.
(2) S.C.R.
StJPRF.lM~ COURT REPORTS
449
In blank transfers the transfer deed signed by the transferor
r959
is handed over with the share scrip to the transferee who may M
H
1
complete the transfer by entering his name and applying to the 7' esds~s. C owLra'
f
. t
t"
f h.
Th
I
ra ing
o.
td.
company
or reg1s ra !On o
1s name.
e company on y
'
recognises those persons whose names are on the register of Th
v.. .
members and they alone are legally entitled to the dividend
• Commissioner
declared. In the case of a blank transfer equities exist between
of Income-tax,
Calcutta
the transferor and the transferee and the transferee has a right
to claim the dividend from the transferor who holds it in trust
for him, but the company is only liable to the transferor and not
to the transferee. Though the transferee is clothed with an
equitable ownership he is not a full owner, since the legal
interest vis-a-vis the company still outstands in the transferor.
CIVIL APPELLATE JURISDICTION:
Civil Appeal No.
65 of 1956.
Appeal from the judgment and order dated August
31, 1954, of the Calcutta High Court in Income-tax
Ref. No. 57 of 1953.
N. C. Chatterjee and B. P. Maheshwari, for the
appellant.
K. N. Rajagopala Sastri, R. H. Dhebar and D.
Gupta, for the respondent.
1959. March 26.
The Judgment of the Court
was delivered by
HrnAYATULLAH, J.-Messrs. Howrah Trading ComHidayatullah J.
pany, Ltd., Calcutta (hereinafter called the assessee)
obtained on April 28, 1955, a certificate under s. 66A(2)
of the Indian Income-tax Act from the Calcutta High
Court, to appeal to this Court against the judgment
dated August 31, 1954, in Income-tax Reference
No. 57 of 1953. The Divisional Bench (Chakravarti,
C. J., and Lahiri, J.) in the judgment under appeal
merely followed their earlier judgment delivered the
same day in Income-tax Reference No. 22 of 1953,
since reported as Hindustan Investment Corporation v.
Commissioner of Income-tax (1). It is the latter judgment which gives the reasons for the decision.
The facts of the case have been stated with sufficient
fulness, yet briefly, in the statement of the case submitted by the Income-tax Appellate Tribunal (Calcutta Bench) and may be conveniently set out in its
ow11 words:
(r) (1955] 27 I.T.R. 202.
57
450
SUPREME COURT REPORTS [1959] Supp.
1959
"The applicant had received sums of Rs. 3,831,
MeSS>s. Howrnh Rs. 6,606, Rs. 7,954 aud Rs. 8,304 in the four assessTmding Co .. Ltd. ment years, 1944-45, 1945-46, 1946-47 and 1947-48 as
v.
income from dividends. The shares in respect of
The, Ciommiss,ion" which this dividend income was received were the
oJ
ncome- ax,
.
Calcutta
property of the A pphcant but in the books of the
various companies these stood in the names of other
Hidayatullah J. persons. It appears that these shares were purchased
by the Applicant from other persons under a blank
transfer but the transfers had not been registered
with the various companies. The Applicant's claim
in these income-tax proceedings was that these shares
although not registered in the name of the applicant
were the property of the applicant. It was further
claimed that this dividend income should be grossed
up under s. 16(2) and credit for the tax deducted
should be allowed to the Applicant under s. 18(5)."
The Income-tax Officer did not accept this claim, and
the appeals of the assessee were rejected by the
Appellate Assistant Commissioner of Income-tax,
Calcutta, "A" Range and by the Appellate Tribunal.
The Tribunal, however, on being moved, referred the
following question to the High Court :
" Whether in the facts and circumstances of this
case, the Applicant (the assessee) was entitled to have
this dividend income grossed up under section 16(2}
and claim credit for tax deducted at source under section 18(5) of the Income-tax Act? "
The High Court answered the question in the negative, thus affirming the decisions of the Department
and the Appellate Tribunal.
The assessee contends that the decision of the High
Court is erroneous, and that it is entitled to have the
dividend income 'grossed up' under s. 16(2) and also
to claim credit for tax deducted at source, uuder
s. 18(5) of the Income-tax Act.
·
The relevant sectious are as follows:
" 16(2) : For the purposes of inclusion in the
total income of an assessee any dividend shall be
deemed to be income of the previous year in which it
is paid, credited or distributed or deemed to have been
(2) S.C.R. . SUPREME COURT REPORTS
451
paid, credited or distributed to him, and shall be inz959
creased to such amount as would, if income-tax (but
t
)
t h
t
1. bl t
th t t l .
Messrs. Howrah
not super- ax a t e r~ e app ic~ e. o
e o a
m- Trading Co., Ltd.
come of the company without takmg mto account any
v.
rebate allowed or additional income-tax charged for 1'he Commissioner
the financial year in which the dividend is paid, ereof Income-tax,
dited or distributed or deemed to have been paid,
Calcutta
credited or distributed, were dedncted therefrom, be
'
Hidayatullah J.
equal to the amount of the dividend: (proviso omitted).
18(5) :
Any deduction made and paid to the
account of the Central Government in accordance with
the provisions of this section a'Il.d any sum by which
a dividend has been increased under sub-section (2)
of section 16 shall be treated as a payment of income.
tax or super-tax on behalf ...... of the shareholder ..... .
and credit shall be given to him therefor on the production of the certificate furnished under ..... section 20
..... .in the assessment, if any, made for the following
year under this Act : (proviso omitted).
49B(l): Where any dividend has been paid, credited or distributed or is deemed to have been paid,
credited or distributed to any of the persons specified
in section 3 who is a shareholder of a company which
is assessed to income-tax in the taxable territories or
elsewhere, such person shall, if the dividend is included in his total income, be deemed in respect of such
dividend himself to have paid income-tax (exclusive
of super-tax) of an amount equal to the sum by which
the dividend has been increased under sub-section (2)
of section 16."
It was contended in the High Court that inasmuch
as s. 16(2) referred to an ' assessee ', the assessee company was entitled to have the dividend 'grossed up'
by the addition of income-tax paid by the various
companies at source and consequently to have the
benefit of the credit allowed under the two remaining
sections. In the opinion of the High Court, an assessee whose name was not in the register of members of
the companies was not entitled to the benefit of these
provisions. The learned Judges of the High Court
were of the opinion that the word " shareholder " in
452
SUPREME COURT REPORTS [1959] Supp.
'959
s. 18(5) had the same signification as the word "mem-
,1
-
her" used in the Indian Companies Act; and that
"ess>s. Howrah h
l.fi d
b
•ct
d
Trading co., Ltd. t e assessee was not qua 1 e
to
e cons1 ere
as a
v.
shareholder, even though by a blank transfer it had
The Commissioner purchased the relevant shares. In our opinion, the
of Income-tax, High Court was right in its conclusion.
Calcutta
A company when it pays income-tax, does not do
Hidayatullah ;. so on behalf of the shareholders. It is itself chargeable under the Act. In Gull v. Inland Revenue Commissioners (1), Lord Atkin stated the . Jaw (which in
substance is also the law in our country) thus:
"My Lords, it is now clearly established that in
the case of a limited company the company itself is
chargeable to tax on its profits, and that it pays tax
in discharge of its own liability and not as agent for
its shareholders ......... At one time it was thought that
the company, in payiug tax, paid 'on behalf of the
shareholder ; but this theory is now exploded by decisions in this House, and the position of the shareholders as to tax is as I have stated it."
When the company pays its own income-tax and
declares a dividend from the balance of its profits, it
deducts from such dividend a proportionate part of
the amount of the tax paid by it. This principle is
explained in another English case, and it is substantially also the law in this country. In Inland Revenue
Commissioners v. Blott('), Viscount Cave stated the
l(l. w in these words :
"Plainly, a company paying income-tax on its
profits does not pay it as agent for its shareholders. It
pays as a tax-payer, and if no dividend is declared,
the shareholders have no direct concern in the payment. If a dividend is declared, the company is entitled to deduct from such dividend a proportionate
part of the amount of the tax previously paid by the
company; and, in that case, the payment by the company operates in relief of the shareholder. But no
agency, properly so called, is involved."
The share-holders, however, get the benefit of the
payment of the tax by the company. Though under
( l) [r940] A.G. 51, 56; (1939) 22 Tax Cas. 6o3, 636.
(2) [192rJ 2 A.C. 171, 201.
(2) S.C.R.
SUPREME COUH.T REPORTS
453
s. 16(2) of the Act their dividend is increased by' a
I959
proportionate amount of tax paid by the company, M
I-I
l
the payment of the tax by the company is deemed Tr:~;:~ co~w{~a'.
under ss. 18(5) and 49B(l) to be payment by the
v.
shareholders. The rates of income-tax applicable to The Commissioner
the company are, in most instances, higher than the
0! Income-tax,
rates applicable to the individual shareholders, and by
Calcutta
this process of 'grossing up', as it is commonly callI-Iidayatultah J.
ed, the recipient of the diVidend gets some benefit.
The position of a shareholder who gets dividend
when his name stands in the register of members of the
company causes no difficulty whatever. But transfers
of shares are common, and they take place either by
a folly executed document such as was contemplated
by Regulation 18 of Table A ofthe Indian Companies
Act, 1913, or by what are known as 'blank transfers'.
In such blank transfers, the name of the transferor is
entered, and the transfer deed sig.ned by the transferor is handed over with the share scrip to the transferee, who, if he so chooses, c9mpletes the transfer by
entering his name and then applying to the company
to register his name in place of the previous holder of
the share. The company recogn,ises no peri;;on except
one whose name is on the register of members, upon
whom alone calls for unpaid capital can be made and
to whom only the dividend declared by the company
is legally payable. Of course, between the transferor
and the transferee, certain equities arise even on the
execution and handing over of 'a bla.nk transfer', and
among these equities is the right of the transferee to
claim the dividend declared and paid to the transferor
who is treated as a trustee on behalf of the transferee.
These equities, however, do not touch the company,
and no claim by th.e transferee whose name is not in
the register of members can be made against the
company, if 'the tranferor retains the money in his
own hands and fails to pay it to him.
A glance at the scheme of the Indian Companies_
Act, 1913, shows that the words "member", "shareholder" and "holder of a share" have been used
interchangeably in that Act.
Indeed, the opinion of
most of the writers on the subject is also the same.
454
SUPREME COURT REPORTS [1959] Supp.
Buckley on the Companies Act, 12th Edition, page
Messrs. llow•ah 803 has pointed out that the right of a transferee is
Trnding co .. Ltd. only to call upon the company to register his name
v.
and no more.
No rights arise till such registration
r959
T lie Conimissioner tak:es place.
of Income-tax,
Section 2(16) of the Indian Companies Act, 1913,
Calcutta
defines" share" as" Rh are in the share capital of the
Hidayatullah J. company''. Section 5 deals with the mode of forming
incorporated companies, and in the case of companies
limited by shares, the liability of the members is limited to the amounts, if any, unpaid on the shares respectively held by them. By s. 18, Table A is made
applicable to companies, unless by the Articles of any
company the terms of Table A have been excluded or
modified.
Regulation 18 of Table A reads as follows:
" The instrument of transfer of any share in the
company shall be executed both by the transferor and
transferee, and the transferor shall be deemed to remain holder of the share until the name of ~he transferee is entered in the register of members in respect
thereof."
The words " holder of a share " are really equal to the
word " shareholder ", and the expression " holder of a
share " denotes, in so far as the company is concerned,
only a person who, as a shareholder, has his name
entered on the register of members.
A similar view
of the Companies Clauses Consolidation Act, 1845, was
taken in Nanney v. Morgan (1).
The learned Lord
,Justices held that under s. 15 of that Act, the transferee had not the benefit of a legal title till certain
things were done, which were indicated by Lopes,
L. J., in the following passage:
" Therefore the transferor, until the delivery of
the deed of transfer to the secretary, is subject to all
the liabilities and entitled to all the rights which
belong to a shareholder or stockholder, and, in my
opinion, until the requisite formalities are complied
with, he continues the legal proprietor of the stock or
shares subject to that proprietorship being divested,
which it may be at any moment, by a compliance
with the requisite formalities. "
(I) (1888) 37 Ch. D. 346, 356.
(2) S.C.R.
SUPREME COURT :REPO:Rrs
455
The same position obtains in India, th_ough the com-
'959
pletion of the transaction by having the name entered Messrs. Howrah
in the register of members relates it back to the time Trading co, Ltd.
when the transfer wa.s first made. See Nagabushanam
v.
v. Ramachandra Rao (1).
The Commissioner
During the period that the transfer exists between of Income-tax,
£
Calcutta
the trans eror and the transferee without emerging as
a binding document upon the company, equities exist 1-Iidayatullah 1.
between them, but not between the transferee and the
company. The transferee can call upon the transferor
to attend the meeting, vote according to his directions,
sign documents in relation to the issuance of fresh
capital, call for emergent meetings and inter alia, also
compel the transferor to pay such dividend as he may
have received. See E. D. Sassoon & Go. Ltd. v.
Patch (2 ) approved in Mathalone v. Bombay Life Assurance Go. Ltd. (3).
But these rights though they, no
doubt, clothe the transferee with an equitable ownership, are not sufficient to make the transferee a full
owner, since the legal interest vis.a-vis the company
still outstands in the transferor ; so much so, that the
company credits the dividends only to the transferor
and also calls upon him to make payment of any unpaid capital, which may be needed. The cases in
Black v. Homersham (4) or Wimbush, In re Richards v.
Wimbush (5) hardly advance the matter further than
this.
The position, therefore, under the Indian Companies Act, 1913, is quite clear that the expression
" shareholder " or " holder of a share " in so far as
that Act is concerned, denotes no other person except
a "member". The question that arises in the present
case is whether by reason of ss. 16(2) and 18(5) the
assessee, who was a transferee on a 'blank transfer'
is entitled to the benefits of the grossing up of the
dividend income. Learned counsel for the assessee
strenuously contends that the assessee being an owner
in equity of the shares and thus also of the dividend
is entitled to this benefit.
He ;refers to the use of the
word 'assessee' in s. 16(2).
The Department, on the
(r) (r922) I.L.R. 45 Mad. 537.
(2) (r922) 45 Born. L.R. 46.
(3) [1954] S.C.R. rr7.
(4) (r878-79) L.R. 4 Ex. D. 24,
(5) [1940] I Ch. D. 92.
456
SUPREME COURT REPOR'.l'S [1959] Supp.
'959
other hand, says that the dividend can be increased
Mems. How,ah under s. 16(2) and credit allowed under s. 18(5) if the
Trading co., Ltd. assessee is a 'shareholder', because· the benefit of
v.
s. 18(5) can go only to the shareholder, i.e., a person
The Commission" with his name on the register of members, and not to
0f Income-tax, a person holding an equity against such shareholder.
Calcutta
The assessee contends that the word "shareholder"
Hidayatuilah J. includes even a person who holds a share as a result
of a blank transfer, and does not necessarily mean a
member of the company, whose name is on the register of members.
Authorities on this point are not wanting, and indeed, in the judgment of the Calcutta High Court
they have all been referred to.
They are all against
the assessee. See Skree Shakti Mills Ltd. v. Commissioner of Income-tax('), Jaluram Bhikulal v. Commissioner of Income-tax('), Arvind N. Mafatlal v. Incometax Officer (3) and Bikaner Trading Co. v. Commissioner
of Income-tax(').
The question: that falls for consiqeration is whether
the meaning given to the expression "shareholder "
used in s. 18(5) of the Act by these cases is correct.
No valid reason exists why" shareholder" as used in
s. 18(5) should mean a person other than the one
denoted by the same expression in the Indian Companies Act, 1913. In In re Wala Wynaad Indian Gold
Mining Company('), Chitty, J., observed:
" I use now myself the term which is common in
the Courts, 'a shareholder', that means the holder of
the shares. It is the common term used, and only
means the person who holds the shares by having his
name on the register. "
Learned counsel for the assessee cited a number of
authorities in which the ownership of the dividend
was in question, and it was held that the transferee
whose name was not registered, . was entitled to the
dividend after transfer had been made. These cases
are Commissioners of Inland Revenue v. Sir John Oakley (0), Spence v. Commissioners of Inland Revenue(')
(1) [1948] 16 I.T.R. 187,
(2) [1952] 22 I.T.R. 490.
(3) [1957] 32 I.T.R. 350.
(4) [1953] 24 I.T.R. 4r9.
(5) (1882) 21 Ch. D. 849, 854.
(6) (1925) 9 Tax Cas. 582.
(7) (1941) 24 Tax Cas. 31I.
(2) S.C.R. SUPREME COURT REPORTS
457
and others cited at page 367 in Multipar Syndicate,
r959
Ltd. v. Devitt (
1
).
· • •
Messrs. Howrah
No one can doubt the correctness of the propos1t1on Trading co., Ltd.
in these cases, but from an equitable right to compel
v.
the transferor to give up the dividend to the trans- The Commissioner
feree, to a claim to the dividend by him as a " shareof Income-tax,
holder" against the company is a wide jump. In so
Calcutta
far as the company is concerned, it does not even Hidayatullah 1.
issue the certificate under s. 20 of the Income-tax Act
in the name of an unregistered transferee but only in
the name of the transferor whom it recognises, because
his name is borne on its books. Section 20 lays
down:
" The principal officer of every company shall, at
the time of distribution of dividends, furnish to every
person receiving a, dividend a certificate to the effect
that the company has paid or will pay income-tax on
the profits which are being distributed, and specifying
such other particulars as may be prescribed. "
The meaning of s. 20 as also of s. 18(5) is clear if they
are read with s. 19A, under which information regarding dividends has to be supplied by the company
when demanded by the Income-tax Officer. It lays
down:
"The principal officer of every company ... shall,
on or before the 15th day of June in each year, furnish to the prescribed officer a return in the prescribed
form and verified in the prescribed manner of the
names and of the addresses, as entered in the register of
shareholders maintained by the company, of the shareholders to whom a dividend or aggregate dividends ex•
ceeding such amount as may be prescribed in this behalf
has or have been distributed during the preceding year
and of the amount so distributed to each such shareholder." (Italics supplied).
Section 19A makes it clear, if any doubt existed, that
by the term" shareholder" is meant the person whose
name and address are entered in the register of
"shareholders" maintained by the company.
There
is but one register maintained by the Company. There
(r) (1945) 26 Tax Cas. 359.
58
458 SUPREME COURT REPORTS [1959] Supp.
1959
is no separate register of " shareholders" such as the
assessee claims to be but only a register of " memMems. Howrnh b
"
Th' t k
.
d' t 1
t
th
. t
f
Trading co., Ltd. ers b.
1sd a es us 1mme h1a e y o c e reg1s er o
v.
mem ers, an demonstrates t at even 1or the purpose
1 he Commission" of the Indian Income-tax Act, the words "member"
oJ Income-tax, and "shareholder " can be read as synonymous.
Calcutta
The words of s. 18(5) must accordingly be read in
Hidayatullak ;. the light in which the word "shareholder" has been
used in the subsequent sections, and read in that
manner, the present assessee, notwithstanding the
equitable right to the dividend, was not entitled to be
regarded as a " shareholder "· for the purpose of
s. 18(5) of the Act. That benefit can only go to the
person who, both in law and in equity, is to be regarded as the owner of the shares and between w horn and
the company exists the bond of membership and
ownership of a share in the share capital of the company.
In view of this, we are satisfied that the answer
given by the Calcutta High Court on the question
posed by the Tribunal was correct.
The appeal fails, and is dismissed with costs.
Appeal dismissed.