Registered shareholder entitlement governs gross-up rebate on dividend income; beneficial ownership alone is insufficient.

A rebate under section 18(5) of the Indian Income-tax Act, 1922 on grossed-up dividend income is available only to the shareholder whose name stands registered in the company's share register. The court treated the gross-up credit as attaching to the registered shareholder, because the dividend is deemed to include tax paid on that shareholder's behalf. An unregistered purchaser or beneficial owner cannot claim the rebate merely on the basis of a beneficial or possessory interest. The assessee, not being the registered holder of the relevant shares, was held not entitled to the rebate.

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Issues: Whether an unregistered purchaser or beneficial owner of shares, whose name is not entered in the company register, is entitled to claim rebate under section 18(5) of the Indian Income-tax Act, 1922 in respect of dividend income grossed up under section 16(2).

Analysis: The right to the gross-up credit under section 18(5) is attached to the "shareholder" contemplated by the Act, namely the person whose name stands registered in the company's share register. The section treats the increased dividend as payment of tax on behalf of that shareholder alone. On the Tribunal's findings, the assessee was not the registered holder of the shares in question, and the benefit could not be extended merely because it may have had some beneficial or possessory interest in the shares.

Conclusion: The assessee was not entitled to rebate under section 18(5) in respect of dividends on shares standing in the names of others.

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