Deemed dividend taxation follows the registered shareholder, not the beneficial owner, where share ownership is split.

Deemed dividend under section 23A of the Indian Income-tax Act, 1922 was taxable in the hands of the registered shareholder, not the beneficial owner, where the two differed. The court applied its earlier interpretation of sections 16(2) and 18(5), under which grossed-up dividend income is attributed to the registered holder, and noted that section 23A contemplates inclusion of the shareholder's proportionate share in his income. Because the shares stood in the names of coparceners and the Hindu undivided family was not the registered holder, the amount could not be assessed as the family's income and remained assessable only in the hands of the individual registered shareholders.

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Issues: Whether the amount deemed to have been distributed as dividends under section 23A of the Indian Income-tax Act, 1922 was taxable in the hands of the Hindu undivided family or only in the hands of the registered shareholders.

Analysis: The issue was governed by the earlier decision applying sections 16(2) and 18(5) of the Indian Income-tax Act, 1922, under which the registered shareholder, and not the beneficial owner, is the person to be considered for grossed-up dividend income. The provision in section 23A itself contemplates inclusion of the proportionate share of the shareholder in his income. Since the shares stood in the names of the coparceners and the Hindu undivided family was not the registered holder, the amount could not be assessed as the family's income. The earlier decision of the same court bound the Tribunal and the reference court.

Conclusion: The deemed dividend amount was not assessable in the hands of the Hindu undivided family and was assessable only in the hands of the individual registered shareholders.

Ratio Decidendi: For deemed dividend taxation under section 23A of the Indian Income-tax Act, 1922, liability attaches to the registered shareholder and not to the beneficial owner where they are different.

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