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Commissioner of Income-tax, Bombay City-ii, Bombay Vs. Juliet M. Fateh - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation;Company
CourtMumbai High Court
Decided On
Case NumberIncome-tax Reference No. 17 of 1968
Judge
Reported in[1979]49CompCas112(Bom); [1979]116ITR368(Bom)
ActsCompanies Act, 1956 - Sections 2, 2(27), 2(46), 114, 115, 115(2), 115(5), 144, 194, 199 and 237; Income Tax Act, 1961 - Sections 199
AppellantCommissioner of Income-tax, Bombay City-ii, Bombay
RespondentJuliet M. Fateh
Appellant AdvocateR.J. Joshi, Adv.
Respondent AdvocateD.H. Dwarkadas, Adv.
Excerpt:
direct taxation - payment of tax - section 237 of companies act, 1956 - whether assessee was entitled to credit of tax at source from gross dividend - it was not disputed that assessee held shares in company and dividend became payable to her by company and while paying dividend which was due to her tax was deducted by principal officer of company - income-tax officer should be satisfied that amount of tax paid by assessee exceeded amount for which assessee was properly chargeable for that year and in that situation assessee entitled to claim credit for excess tax paid by her to income-tax department - held, section 237 assessee would be entitled to claim credit for excess tax paid by her in respect of dividend income receivable by her from company in previous year relating to assessment.....tulzapurkar, j. 1. the question that has been referred to this court for determination in this reference made by the appellate tribunal under s. 256(1) of the i.t. act, 1961, runs thus : 'whether, on the facts and in the circumstances of the case, the assessee was entitled to the credit of the tax of rs. 1,350 deducted at source from the gross dividend of rs. 4,500 ?' 2. the assessee in an individual and the assessment year is 1962-63 the corresponding previous year being the financial year which ended on march 31, 1962. the assessee's husband owned a number of shares in oxy-chloride flooring products ltd. and out of his said shareholding he had got 1,000 shares converted into share warrants as permitted by the relevant articles of association of the company. the assessee inherited the.....
Judgment:

Tulzapurkar, J.

1. The question that has been referred to this court for determination in this reference made by the Appellate Tribunal under s. 256(1) of the I.T. Act, 1961, runs thus :

'whether, on the facts and in the circumstances of the case, the assessee was entitled to the credit of the tax of Rs. 1,350 deducted at source from the gross dividend of Rs. 4,500 ?'

2. The assessee in an individual and the assessment year is 1962-63 the corresponding previous year being the financial year which ended on March 31, 1962. The assessee's husband owned a number of shares in Oxy-chloride Flooring Products Ltd. and out of his said shareholding he had got 1,000 shares converted into share warrants as permitted by the relevant articles of association of the company. The assessee inherited the said share warrants. In the previous year relevant to assessment year 1962-63, the assessee received a net dividend of Rs. 3.150 after deduction of tax of Rs. 1,350 from the company in respect of the said share warrants. In making the assessment on the assessee, the ITO refused to give any credit for the tax deducted at source and he straightaway taxed the net dividend of Rs. 3,150. According to him, the assessee was not entitled to the credit for the tax deducted at source because she was not registered in the books of the company as the owner of those shares and hence she could not be treated as the shareholder for the purpose of getting credit for the tax deducted at source under s. 199 of the Act. He relied upon the decision of the Supreme Court in Howrah Trading Co. Ltd v. CIT : [1959]36ITR215(SC) . The assessee preferred an appeal to the AAC, who did not accept the view of the ITO. The AAC took the view that the ratio of the Supreme Court decision in Howrah Trading Co's case : [1959]36ITR215(SC) was not applicable, inasmuch as, in the instant case before, him, there was no question of any dual ownership of shares in question, there was no conflict between the legal ownership and the equitable ownership of the shares and in fact it was the assessee who was both legal as well as beneficial owner of the shares specified in the share warrants. After referring to ss. 114 and 115 of Companies Act and after considering the relevant articles of association of the Company, namely, arts 52 to 55 he took the view that the assessee owned the shares specified in the share warrants and the company paid her dividends on those shares as the only owner thereof known to it and since as such, while making the payment of dividend, the company had made a deduction at source under s. 199 of the I.T. Act. Accordingly, the AAC allowed the appeal. Aggrieved by the order passed by the AAC the department carried the matter in further appeal to the Tribunal. Several contentions were raised on behalf of the department before the Tribunal. In the first place, it was contended that the tax deduction certificate given by the company did not comply with the form prescribed under r. 31(4) of the I.T. Rules,. 1962. It was next contended that the assessee who held merely the share warrants should not be considered as a shareholder within the meaning of ss. 194 and 199 of the I.T. Act and in support of this latter contention strong reliance was placed upon the decision of the Supreme Court in Howrah Trading Co. Ltd.'s case : [1959]36ITR215(SC) and a couple of other decisions. In reply, it was urged on behalf of the assessee that as regards tax deduction certificate, if there was any mistake therein it was the mistake of the company which had issued the certificate for which the assessee could not be held responsible and on that account she could not be denied the credit for the tax deducted at source. It was further contended that the bearer of share warrant was as much a shareholder within the scope of ss. 194 and 199 as one whose name was entered in the shareholders' register and as such the assessee was entitled to the credit for the tax deducted at source. In any case, it was urged that since the assessee would be entitled to get credit by virtue of s. 237 of the Act, she could not be denied relief in that respect. The Tribunal after considering the relevant provisions of the Companies Act, viz., ss. 114 and 115 as well as the provisions of the articles of association, viz., acts 52 to 55 of the company, came to the conclusion that the holder of the share warrants could be regarded as a shareholder for the purposes of ss. 194 and 199 of the Act. In this behalf, the Tribunal pointed out that under the relevant provisions of the Companies Act as well as the articles of association of the company the bearer or holder of a share warrant was entitled to receive the divided and was entitled to all the privileges and advantages which the shareholder has except those specifically mentioned in the articles and such holder of share warrant will have to be treated as if he was a shareholder of the company and as such the assessee would be entitled to the credit for the tax deducted at source. Alternatively, the Tribunal considered the question as to whether she could be eligible for the credit under the provisions of s. 237 of the Act even if it were assumed for the purpose of argument that as a holder of share warrants she could not be regarded as a shareholder and the Tribunal took the view that in the instant case the identity of the holder of the share warrants as being the persons to whom the dividend was payable had been established without which the company would not have paid the dividend to her and since the company had made payment of divided after deducting tax in respect of the income of the assessee, the assessee would be entitled to get credit even under the provisions of s. 237 of the Act, since what was deducted by the company could be regarded as tax payment made by the assessee herself or on her behalf. As regards the tax deduction certificates which had been issued, the Tribunal gave an opportunity to the assessee to approach the company any obtain from it and produce a proper tax deduction certificate in the prescribed from under the relevant rules. In this view of the matter, the Tribunal upheld the AAC's order and dismissed the appeal. At the instance of the revenue, the question set out at the commencement of the judgment has been referred to us for out opinion.

3. Mr. Joshi appearing for the revenue has invited our attention to the aspect that if regard be had to the definition of the expression 'member' given in s. 2(27) of the Companies Act it would be clear that a bearer or holder of a share warrant is excluded from the definition of the expression 'member'. He further pointed out that the Supreme Court in Howrah Trading Co. Ltd., case [1959] 36 ITR 215 has taken the view that the words 'member', 'shareholder' and 'holder of a share' have been used interchangeably in the Companies Act and, therefore, if the bearer of a share warrant is not a member of the company he would automatically not be either a shareholder of the company or holder of share in the company. He also pointed out that under ss. 114 and 115 of the Companies Act it has been provided that public company limited by shares, if so authorised by its articles, may, with the previous approval of the central Government, with respect to any fully paid up shares, issue under its commons seal a warrant (share warrant) stating that the bearer of the warrant is entitled to the shares therein specified, and may provide, by coupons or otherwise, for the payment of the future dividends on the shares specified in the warrant, that such share warrant entitled the bearer thereof to the shares therein specified and the shares therein specified may be transferred by delivery of the warrant and what on the issue of a share warrant, the company is under an obligation to strike out of its register of members the name of the member then entered therein as holding the shares specified in the warrant as if he had ceased to be a member. He, therefore, urged that since the assessee in the instant case was merely a holder of share warrants in question, she could not be regarded as either a member or a shareholder of the company. According to Mr. Joshi, the expression 'shareholder' occurring in s. 18(5) read with s, 16(2) of the 1922 Act (equivalent to s. 199 of 1961 Act) has been interpreted, and construed by the Supreme Court as being referable to a registered shareholder whose name has been entered or appears in the register of members maintained by the company. S. 194 of the Act speaks of deduction of tax being made at source by the company or the principal officer before making distribution of payment of dividend to a shareholder and s. 199 of the Act speaks of credit being given to the shareholder in respect of such deduction of tax at source made by the company or its principal officer, and according to Mr. Joshi the Supreme Court in Howrah Trading Co.'s case : [1959]36ITR215(SC) has (with reference to corresponding provisions of the 1922 Act being ss. 18(5) and 16(2)taken the view that the provisions of those sections are applicable (meaning thereby the process of grossing up indicated in those provisions) only in the case of a shareholder whose name has been registered in the company's register of members. Reliance was also placed by Mr. Joshi upon decision of this court in Shri Sakthi Mills Ltd. v. CIT : [1948]16ITR187(Bom) , where this court has also taken the view that the 'shareholder' mentioned in s. 18(5) of the 1922 Act is the person who owns certain shares and who is shown as shareholder in the register of the company and that it is only the shareholder of a company to whom dividends are paid who is entitled to the procedure of processing permissible under ss. 16(2) and 18(5). He also relied upon the decision of the Supreme Court in the case of ITO v. Arvind N. Mafatlal : [1962]45ITR271(SC) , where the same view has been reiterated by the Supreme Court, namely that it is only the registered shareholder who is entitled to the benefit of the credit for tax paid by the company under s. 18(5) as well as the corresponding grossing up under s. 16(2). He pointed out that all these three decisions were under the 1922 Act. But he also relied upon a decision of the Andhra Pradesh High Court in the case of CIT v. Smt. Batool Begum : [1976]104ITR642(AP) , a decision under s. 199 of the 1961 Act, where also similar view has been taken by the High Court. Relying on these decisions and the position arising under the relevant sections of the Companies Act, Mr. Joshi contended that since in the instant case the assessee was merely a bearer or holder of share warrants, her husband's name as a shareholder having been struck off from the register of members long prior to the previous year in question, the assessee could not be regarded as a registered shareholder in respect of shares specified in the share warrants and as such she was not entitled to the credit for the tax deducted at source under s. 199 of the I.T. Act, 1961. Mr. Joshi also relied upon the fact that though under clause (ii) of the prov. to s. 199 certain exemptions have been carved out in cases where the dividend on any share is assessable as the income of a person other than the shareholder, and the credit the for the tax deducted at source has been made permissible, such excepted cases would be only those cases which had been prescribed by rules, and he pointed out that r. 30A, which has been framed in that behalf, enumerates several types of cases which would fall under clause (ii) of the prov. to s. 199, but the case of a holder of share warrant is not one of the cases specified in r.30A. He urged that the absence of a case of holder of share warrant in r. 30A should be taken to be the evidence of legislative intend on the part of Parliament that in the case of holder of a share warrant the benefit under s. 199 should not be available.

4. On the order hand, Mr. Dwarkadas appearing for the assessee contended that if the provisions of ss. 114 and 115 of the Companies Act, particularly sub-s. (5) of s. 115 along with the relevant articles of association of the company, particularly art. 55, were carefully scrutinised, it will appear clear that for all purposes. except certain matters which have been specifically mentioned in art. 55, the holder or bearer of a share warrant has been regarded by the company as if he is a member of the company and, therefore, there was no reason why the holder of a share warrant should not be entitled to get credit for the tax deducted at source under the provisions of s. 199 of the I.T. Act. He urged that having regard to the aforesaid provisions the assessee will have to be regarded as a shareholder for the purpose of s. 199 of the Act and as such would be entitled to the credit for the tax deducted at source in respect of dividend income received by the assessee for the shares specified in the share warrants. He contended that the two decisions on which reliance has been place by Mr. Joshi were clearly distinguishable, inasmuch as in each one of those cases the conflict was between the legal ownership shares and equitable ownership of shares and it was in the context of such a conflict that the court had taken the view that it was only the registered shareholder whose name is registered in the books or register of members maintained by the company who was entitled to the benefit of the provision of s. 18(5) read with s. 16(2) of the old Act and ss. 194 and 199 of the 1961 Act. According to him, in the instant case, there was no conflict at all between the legal ownership of shares in question or the equitable ownership of shares in question and indisputably it was the assessee who was both the legal owner as well as the equitable owner or beneficial owner of shares which were specified in the share warrants of which the assessee was the holder, and, therefore, the question which this court is called upon to decide is whether the holder of the share warrants, who has deposited the share warrants with the company after the annual general body meeting of the company was held and who was received the dividend after her identify had been established before the principal officer of the company, would be entitled to the credit for the tax deducted at source by the principal officer of the company and such a case has not been dealt with by any of the decisions on which reliance has been placed by Mr. Joshi. According to Mr. Dwarkadas, reference to clause (ii) of the prov. to s. 199 and the question whether the assessee's case falls under the said prov. read with r. 30A is really irrelevant, for, according to him, having regard to the provisions of ss. 114, and 115 of the Companies Act read with the relevant articles of the articles of associations the assessee will have to be regarded as a shareholder within the meaning of s. 199 of the Act and as such should be entitled to get credit for the tax deducted at source. Alternatively, he submitted that even if the assessee could not be regarded as a shareholder within the meaning of s. 199 of the Act, she should be entitled to get similar credit under the provision of s. 237 of the Act.

5. In order to decide the principal question that arises for out consideration as to whether the assessee could be regarded as a shareholder for the purpose of s. 199 of the Act or not, it will be necessary to refer to the relevant provisions, of the Companies Act as well as the articles of association of the company. At the outset it may be stated that the expression 'shareholder' has not been defined under the Companies Act though the expression 'share' has been defined and the expression 'member' has also been defined. S. 2(27) defines the expression 'member' thus :

'member', in relation to a company, does not included a bearer of a share warrant of the company issued in pursuance of section 114 : 'The expression 'share' has been defined in s. 2(46) thus : ''share', means share in the share capital of a company, and includes stock except where a distinction between stock and shares is expressed or implied.'

6. It is true, as was pointed out by Mr. Joshi that in Howrah Trading Co., case : [1959]36ITR215(SC) , the Supreme Court has observed at p. 218 as follows :

'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 the Act. Indeed, the opinion of most of the writers on the subject is also the same.

We would also proceed on the basis that even the scheme of the Companies Act. 1956, also shows that the three expression have been used interchangeably in that Act. But it must be stated that all the expression defined in s. 2 of the Companies Act, 1956, are to be given the meanings assigned to them 'unless the context otherwise requires'. This will be clear from the opening words of the section. This will have significance when the provisions of s. 115(5) are considered. The topic of share warrants is dealt with by ss. 114 and 115 of the Companies Act. S. 114 deals with issue and effect of share warrants to bearer and it runs thus :

'114. (1) A public company limited by shares, if so authorised by its articles, may, with the previous approval of the Central Government, with respect to any full paid-up shares, issue under its common seal a warrant stating that the bearer of the warrant is entitled to the shares therein specified, and may provide, by coupons or otherwise, for the payment of the future dividends on the shares specified in the warrant.

(2) The warrant aforesaid is in this Act referred to as a 'share warrant.

(3) A share warrant shall entitled the bearer thereof to the shares therein specified, and the shares may be transferred by delivery of the warrant.'

7. S. 115 deals with shares warrants and entries in register of members and it runs thus :

'115. (1) On the issue of a share warrant, the company shall strike out of its register of members the name of the members then entered therein as holding the shares specified in the warrant as if he had ceased to be a member, and shall enter in that register the following particulars, namely :-

(a) the fact of the issue of the warrant;

(b) a statement of the shares specified in the warrant, distinguishing each share by its number; and

(c) the date of the issue of the warrant.

(2) The bearer of a share warrant shall, subject to the articles of the company, be entitled, on surrendering the warrant for cancellation and paying such fee to the company as the board of directors may from time to time determine, to have his name entered as a member in the register of members.

(3) The company shall be responsible for any loss incurred by any person by reason of the company entering in its register of members the name of a bearer of a share warrant in respect of the shares therein specified, without the warrant being surrendered and cancelled.

(4) Until the warrant is surrendered, the particulars specified in sun-section (1) shall be deemed to be the particulars required by this Act to be entered in the register of members; and on the surrender, the date of the surrender shall be entered in that register.

(5) Subject to the provisions of this Act, the bearer of a share warrant may, if the articles of the company so provide, be deemed to be a member of the company within the meaning of this Act, for any purposes defined in the articles ...'

8. Two or three things abundantly become clear on a reading of the aforesaid two section. In the first place, under s. 114 a public company can, if so authorised by its articles, with the previous approval of the Central Government issue a share warrant with respect to any fully paid-up shares, such share warrant stating that the bearer of the warrant is entitled to the shares therein specified and that such share warrant entitled the bearer thereof to transfer the shares therein specified by delivery of the warrant. Secondly, once such share warrant is issued the company is under an obligation to strike out of its register of members the name of the member then entered therein as holding the shares as specified in the warrant as if he had ceased to be member and in stead certain particulars specified in sub-s. (1) are required to be entered in the register. Sub-s. (2) of s. 115 permits the bearer of share warrant to surrender the share warrant for cancellation and again have his name entered as a member in the register of members. Thirdly, sub-s. (5) is very material under which it has been provided that subject to the provisions of this Act the bearer of a share warrant may, if the articles of the company so provide, be deemed to be a member of the company within the meaning of this Act, for any purposes defined in the articles, and this sub-s. (5) if read with the relevant art. 55 that has been framed by the company will make it clear that barring certain specified purposes for all other purposes he is the holder of the shares as if he is a member of the company. In other words, the definition of 'member' in s. 2(27) will have to be read in the context of sub-s. (5) of s. 115 read with art. 55 of the articles of association of the company. Relevant articles dealing with the topic of share warrants are arts. 52 to 55. Art 52 empowers the company to issue share warrants, with respect to any share which is fully paid-up, on application in writing signed by the person or all the persons registered as holder or holders of the share. It is to be noted that this article provides that the share warrant shall state that 'the bearer of the warrant is entitled to the shares therein specified' and may provide by coupons or otherwise for payment of dividends or other moneys, on the shares included in the warrant. It then goes on to provide for striking out the name of the member from the register of members, etc. Art. 53 deals with transfer of share warrant and it provides that a share warrant shall entitle the bearer to the shares included in it and the shares shall be transferred by the delivery of the share warrant and that the provisions of the regulations of the company with respect to transfer and transmission of shares shall not apply thereto; in other words, under art. 53 the shares specified in the share warrant become transferable by delivery of the share warrant. Art 54 deals with reconversion of share warrant into share certificate. Then comes are 55 which is most material and the last part of it, which is relevant runs thus :

'..... but the bearer of the share warrant shall be entitled in all other respects to the same privileges and advantages as if the were named in the Register of Members as the holder of the shares included in the warrant, and he shall be a member of the Company.'

9. This last portion of art. 55 clearly suggest that in all other respects, meaning other than those which have been specifically mentioned in the earlier part of the article, the bearer of the share warrant will have the same privileges and advantages as if he were named in the register of members as the holder of the shares included in the warrant and he shall be member of the company. In the earlier part of the article, it is provided that no person shall, as the bearer of a share warrant, sign a requisition for calling a meeting of the company or attend or vote or exercise any other privileges of a member at a meeting of the company or be entitled to receive any notice from the company nor shall be qualified in respect of the shares specified in the warrants for being a director of the company. In other words, barring these purposes, for all other purposes he is a member of the company. We may point out that this art. 55 has been substantially drawn after regulation 28 and 39 of Table 'A' of the Indian companies Act, 1913, the corresponding articles being arts. 41 and 42 of Table 'A' of the Companies Act, 1956. In view of the aforesaid provisions, which are to be found in ss. 114 and 115, particularly s. 115(5) and arts. 52 to 55, particularly last portion of art. 55, it will appear clear that the bearer or holder of the share warrant for all other purposes which would include the purpose of receiving dividend of the shares mentioned or specified in the share warrant, will have to be regarded as the holder of shares included in the share warrant and he shall be a member of the company. Moreover the share warrants, a specimen of which was produced before us, clearly state in terms that 'the bearer of the warrant was entitled to the shares there in specified', - shares as defined in 2(46). Besides, it was not disputed that in the instant case in the notice for the relevant annual general meeting the holder of share warrants were required on or after 3th September, 1961, the day after the annual general meeting, to apply to the company for the dividends along with the respective share warrants and that accordingly the share warrants were deposited with the company by the assessee when she applied for payment of dividend on which occasion the address and identity of the assessee as the holder of the share warrant was established to the satisfaction of the company. There is also one more aspect which will have a bearing on the question at issue and which has been mentioned by the Tribunal in its order and that aspect is that the appropriate amount of tax to be deducted varies between a resident and a non-resident and if the person holding a share warrant is a non-resident, then the tax will have to be deducted at a different rate; in other words, the deduction of tax either on the basis of residential status or non-residential status of warrant holder must be decided by the company before the appropriate amount of tax is deducted at source and in the instant case the assessee's residential status must have been established before the company and after being satisfied about it the company must have deducted the tax at source in respect of shares specified in the share warrants which were so deposited; in other words, the deduction of tax would be related not only to the quantum of dividend but also to the person entitled to it and in this sense also the payment of dividend would be made by the company only to the person who holds the shares in the company. Having regard to these aspects of the matter, it seems to us clear that the assessee who is the holder of the relevant share warrants will have to be regarded holder of shares, the details of which were specified in the share warrants in question and as such she would be entitled to the credit for the tax deducted at source by the company while making payment of dividend to her under s. 199 of the Act.

10. Looking at the question from the angle of the provisions of the I.T. Act also, the aforesaid position becomes very clear. It is true that under s. 194 the principal officer of the company before making any distribution or payment of dividend to a shareholder is required to deduct the appropriate amount of tax from the amount of dividend payable to such shareholder. Similarly, under s. 199, credit for tax so deducted under s. 194 is required to be given to the shareholder on whose behalf the deduction was made by the principal officer of the company. It is true that both the sections, particularly s. 199, uses the expression 'shareholder' but the section does not refer to any registered share holder as such. After all, the share certificates are merely pieces of evidence proving that the holder thereof owns shares in the company and what is of the essence is that the assessee herself owned shares in the company in order to become entitled to dividend as also to the credit for the deduction of tax made at source while receiving payment of dividend. The expression 'share' has been defined in the Companies Act in 2(46) as meaning shares in the share capital of a company. It cannot be disputed that the assessee in the instant case owned shares in the share capital of the company and such share in the share capital of the company was represented by shares, the particulars of which were specified in the share warrant. Strictly speaking, therefore, the assessee could be regarded as holdings shares in the company, otherwise no dividend would be payable to her by the company at all, and if that be so, whatever tax was deducted at source by the company or its principal officer from out of dividend payable by the company to the assessee would be tax paid on behalf of the assessee and in respect of such tax deducted at source she would be entitled to claim credit of the said amount under s. 199 of the I. T. Act.

11. It is true that the expression 'shareholder' occurring in s. 18(5) of the old Act (1922 Act) and. 199 of the new Act (1961 Act) has been considered by the Supreme Court, this court as well as the Andhra Pradesh High court as being referable to a registered shareholder, that is to say a holder of shares whose name has been registered in the register of members of the company, in three or four decisions on which Mr. Joshi relied, but it must be pointed out that in each one of those cases the court was concerned with the conflict that had arisen between the legal ownership and the equitable ownership and it was in the context of such conflict the question had arisen. Whether the equitable owner of shares would also be entitled to the processing contemplated by s. 18(5) read with s. 16(2) of the old Act or by s. 199 of the new Act; for instance the Supreme Court in Howrah Trading Co.'s case : [1959]36ITR215(SC) was concerned with the question as to whether the purchaser or transferee of shares in whose name the shares had not yet been registered in the register of members of the company was entitled to the grossing up contemplated by s. 18(5) read with s. 16(2) of the Act or not. In terms it was a case where a person who had purchased shares in a company under a blank transfer and in whose name the shares had not been registered in the books of the company sought to obtain benefit of grossing up process under s. 18(5) read with s. 16(2) of the Act and the Supreme Court took the view that such a person was not a 'shareholder' in respect of such shares within the meaning of s. 18(5) of the I.T. Act notwithstanding his equitable right to the dividend on such shares. At page 219 the Supreme Court has observed thus :

'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.' and this proposition was supported by an English decision as well as the provisions of the Indian companies Act,. In other words, whenever there would be a conflict between the legal ownership and the equitable ownership of a share having regard to the provisions of English law as also the provisions contained in the Indian Companies Act, where trusts are not recognised, the shareholder would be the person whose name has been registered with the company in the register of members. Similar was the position in all the other three cases on which reliance has been placed by Mr. Joshi. None of the decisions on which Mr. Joshi has relied deals with the case of a holder or a bearer of share warrant or the question whether such holder of share warrant could be regarded as a shareholder for the purpose of s. 18(5) read with s. 16(2) of the old Act or s. 199 of the 1961 Act. The decisions, therefore are clearly distinguishable and in our view, the question at issue which has been raised before us will have to be answered by having regard to the provisions which are to be found in ss. 114 and 115 of the Companies Act, 1956, read with relevant articles, viz., arts. 52 and 55 of the articles of association of the company, and having regard to those provisions it seems to us clear that the assessee in the instant case will have to be regarded as a shareholder for the purpose of s. 199 of the I.T. Act, 1961.

12. In this view of the matter it is really unnecessary for us to consider the question as to whether clause (ii) of prov. to s. 199 would be applicable or not.

13. On the alternative submission made by Mr. Dwarkadas, we find that he is on a stronger ground. His alternative submission has been that even if it were assumed for the purpose of argument that the holder of a share warrant cannot be regarded as a shareholder within the meaning of s. 199 for the purpose of claiming credit for the tax deducted at source, the assessee's case would fall within the purview of s. 23, which deals with refund of excess tax, paid on behalf of the assessee. S. 23 runs thus :

'237. Refunds. - If any person satisfies the Income-tax Officer that the amount of tax paid by him or on his behalf or treated as paid by him or on his behalf for any assessment year exceeds the amount with which he is properly chargeable under this Act for that year, he shall be entitled to a refund of the excess.'

14. Now, irrespective of the question whether the assessee could be regarded as a shareholder or not in the sense of being a registered shareholder, it cannot be disputed that because she held shares in the company specified in the share warrants which were issued to her, the dividend became payable to her by the company and while paying the dividend which was due to her tax was deducted by the principal officer of the company, which deduction was admittedly at a higher rate than that at which the assessee was liable to pay in respect of dividend income which she was entitled to receive, and it that be so, it would be clear that the ITO should be satisfied that the amount of tax paid by her or on her behalf for the assessment year in question exceeded the amount for which she was properly chargeable for tax for that year and in that situation she would be entitled to claim credit for the excess tax paid by her or on her behalf to the income-tax department. In our view, therefore, even on the basis of the alternative submission made by Mr. Dwarkadas under s. 237, the assessee would be entitled to claim credit for the excess tax paid by her in respect of dividend income receivable by her from the company in the previous year relating to the assessment year in question.

15. Having regard to the above discussion, the question that has been referred to us will be answered in the affirmative and in favour of the assessee.

16. Mr. Dwarkadas says that he is not pressing for costs since the assessee has not been charged by her legal advisers : there will, therefore, be no order as to costs.


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