Sabyasachi Mukharji, J.
1. This is a reference under Section 27(1) of the W.T. Act, 1957. The following question has been referred to us :
'Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the shares valued at Rs. 6,89,714 should be excluded from the net wealth of the assessee for the assessment year 1958-59?'
The assessment year is 1958-59, for which the valuation date is 12th October, 1958. The assessee gifted shares valued at Rs. 6,89,714 to Shri Mahesh Kumar Jatia, grandson of the assessee. The gift was made on 10th November, 1956, and a trust deed was executed on 8th July, 1957. The transfer of the shares has been registered in the name of Mahesh Kumar Jatia in 1958 which falls after the valuation date. It is significant, therefore, to note that both 10th November, 1956, and 8th July, 1957, fall before the valuation date. In the register of members of the company the change of shareholding occurred after the valuation date in 1957. The relevant valuation date is 12th October, 1957. There is a mistake in the order of the Tribunal in the statement of the case in para. 3 but the correct date appears from the order of the Tribunal. The registration in the name of Mahesh Kumar Jatia took place after the valuation date and both the execution of the trust deed, which was done on 8th July, 1957, as well as the making of the gift, which was done on 10th November, 1956, were prior to the valuation date. The WTO was of the view that the assessee was the owner of the shares during the relevant year as the shares were transferred in the name of Mahesh Kumar Jatia only in 1958. Thus, he included the value of those shares amounting to Rs. 6,89,714 in the total wealth of the assessee.
2. Being aggrieved by the order of the WTO the assessee went up in an appeal before the AAC. It was urged before him that the value of the shares amounting to Rs. 6,89,714 should not have been included in the wealth of the assessee as the same was gifted to Mahesh Kumar Jatia. The AAC was of the View that the gift was made on 10th November, 1956, and a trust deed was executed on 8th July, 1957. Since the delivery of the shares was made over to the trustees nothing more remained to be done by the assessee for effectuating the transfer of the shares and thus he excluded the value of the shares amounting to Rs. 6,89,714 from the net wealth of the assessee.
3. Being aggrieved by the AAC's order the Revenue went up in appeal before the Tribunal. It was contended before the Tribunal that unless there was registration of the transfer the legal ownership would still be with the assessee and as the transfer of the shares had been registered in the name of Mahesh Kumar Jatia only in 1958, the assessee was the owner of the shares till then and the value of the shares should be included in the net wealth of the assessee. The Tribunal after referring to the share certificates and the facts of the case observed that the declaration of gifts in respect of these shares was made on 10th November, 1956, and the trust deed was executed on 8th July, 1957. Though the transfer of the shares was registered in 1958, the value of these shares could not be included in the wealth of the assessee. On these facts the question of law has been referred to this court.
4. In our opinion, the ratio of the decision of the Madras High Court in the case of R. Subba Naidu v. CGT : 73ITR794(Mad) , would apply to the facts of this case. There the Madras High Court considered this and held that when shares in a joint stock company were the subject-matter of transfer, the provisions of the Transfer of Property Act were not conclusive and it should be seen whether there was transfer in accordance with the provisions of the Companies Act. The transfer of the interest in the shares from the transferor to the transferee was independent of the requirement of its registration for the purposes of the Companies Act as, without an anterior transfer, there could be no question of applying for a registration of it. There should first be a transfer properly made of the shares which should then be presented along with the share certificates to the board of directors either by the transferor or by the transferee for a change of registration in respect of them and until such a change was effected in the books of the company, the transferor would continue to be the holder of the shares. Discussing the facts of that case the Madras High Court held, (i) there was a completed gift of the shares to the daughter which operated with full force between the assessee and his daughter notwithstanding that, vis-a-vis the company, he continued to be the holder of the shares in the absence of registration of the transfer, and (ii) the transfer under the deed of settlement of 1959 was of the entire interest in the shares to the daughter.
5. This view of the Madras High Court was approved by the Supreme Court in the case of Vasudev Ramchandra Shelat v. Pranlal Jayanand Thakar : 1SCR534 , of the said judgment.
6. The ratio of the same principle was followed in a different context by the Rajasthan High Court in the case of CIT v. Smt. Suraj Bai .
7. Reliance was placed on a decision of the Supreme Court in the case of Howrah Trading Co. Ltd. v. CIT : 36ITR215(SC) . The Supreme Court observed, at p. 218 of the report, as follows :
'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 fully executed document such as was contemplated by regulation 18 of Table A of the 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 signed by the transferor is handed over with the share scrip to the transferee, who, if he so chooses, completes 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 recognises no person 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 'blank 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 the transferee whose name is not in the register of members can be madeagainst the company, if the transferor retains the money in his own hands and fails to pay it to him.'
The Supreme Court noted at p. 219 as follows:
'During the period that the transfer exists between the transferor and the transferee without emerging as a binding document upon the company, equities exist 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 & Co. Ltd. v. Patch : (1943)45BOMLR46 , approved in Mathelone v. Bombay Life Assurance Co. Ltd, : 1SCR117 . 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.'
So far as the gifts of the movable properties are concerned, the same principle was also reiterated by the Supreme Court in the case of CIT v. Bhurangya Coal Co. : 34ITR802(SC) . Some of these principles were summarised by this court in the case of CIT v. Ashok Glass Works : 103ITR379(Cal) of this decision it was observed as follows:
'The question how the gifts of money or movable property like the money should be judged and what are the necessary ingredients of constituting such gifts have come up for consideration in several decisions.
We may refer to the decisions in the case of P.A.C. Ratnaswamy Nadar & Sons v. Commissioner of Income-tax : 46ITR1148(Mad) , in the case of Commissioner of Income-tax v. Shyamo Bibi : 59ITR1(All) , in the case of Balimal Nawal Kishore v. Commissioner of Income-tax , in the case of Bhau Ram Jawaharmal v. Commissioner of Income-tax : 82ITR772(All) , in the case of Controller of Estate Duty v. C.R. Ramchandra Gounder : 88ITR448(SC) and in the case of Commissioner of Income-tax and Controller of Estate Duty v. N. R. Ramarathnam : 91ITR1(SC) . The principles that emerge from several decisions appear to us to be as follows : (i) There must be some evidence of transfer of property in question from the donor to the donee, (ii) There must be evidence also indicating the acceptance of the gift by the donee.'
Applying the ratio of the said decisions, it appears to us that in this case, the Tribunal was right in holding, in view of the fact that both the delivery of the share certificates to the donee as well as the execution of the deed of transfer in favour of the donee were before the valuation date, the gift was complete and the value of the said shares could not be included, for the purpose of wealth-tax, in the value of the wealth of the assessee. In the case of Smt. Satyabati Goswami v. CGT  113 ITR 228 the Gauhati High Court had to deal with a similar question. But this aspect was not adverted to by the Gauhati High Court as to whether, in a case where, the share certificates were delivered and the transfer deed was executed before the particular date but the registration took place subsequently, the gift so far as the donee or donor was concerned was complete on the happening of the first two events or had to wait till the actual registration of the transfer in the name of the donee. Therefore, in our opinion, the observations of the Gauhati High Court would not be of much assistance in this case.
8. In the view we have taken, we are of the opinion, the Tribunal was right in its conclusion and; therefore, the question must be answered in the affirmative and in favour of the assessee.
9. In the facts and circumstances of the case, there will be no order as to costs.
Suhas Chandra Sen, J.
10. I agree.