Deemed dividend under Section 23A follows registered joint holders, not merely the first-named holder or beneficial owner.

Section 23A treats deemed dividend as a notional distribution of undistributed profits and requires the proportionate share to be included in the shareholder's total income. Where shares stand in joint names, the provision does not distinguish between the first-named holder and other joint holders, and it does not permit assessment by substituting beneficial ownership for registered shareholding. The statutory focus remains on the registered shareholder identified by the Act, while company articles governing voting or dividend receipt do not alter that tax position.

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Issues: Whether, for the purpose of Section 23A, the deemed dividend income of shares standing in joint names is assessable only in the name of the first-named joint holder, or in the hands of all joint registered holders; and whether the beneficial owner can be substituted for the registered shareholder in such an assessment.

Analysis: Section 23A creates a notional distribution of undistributed profits and directs that the proportionate share of each shareholder be included in that shareholder's total income. The provision does not distinguish between first-named and other joint holders, nor does it authorise assessment by reference to beneficial ownership where the statute speaks of the registered shareholder. The scheme of the Act treats Section 23A as a computational provision, and the associated company law articles merely regulate administrative rights such as voting and receipt of dividends; they do not confer a special substantive status on the first-named joint holder. The charging provisions do not displace the specific mandate of Section 23A, and there is no warrant in the section for taxing someone other than the registered joint holders as the shareholder.

Conclusion: The deemed dividend was taxable in the hands of the joint registered holders, not solely in the hands of the first-named holder or any alleged beneficial owner. The answer was therefore in favour of the assessee on the substantive reference.

Final Conclusion: The reference was answered by holding that joint registered holders are the shareholders for Section 23A purposes and the artificial dividend income must be included in their hands accordingly.

Ratio Decidendi: Where a taxing provision expressly directs inclusion of deemed income in the hands of the shareholder, the assessment must follow the registered shareholder identified by the statute, and beneficial ownership cannot be substituted unless the statute itself so provides.

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