Transfer of shares requires completed sale and ascertainment; executory agreement alone does not pass title.

Shares, being movable property, pass only when the parties intend title to pass and the transfer is completed in accordance with the contract and governing rules for specific goods. On the facts, the shares were never delivered, identified by serial numbers, or accompanied by transfer forms or share scrips, and no payment was made in 1948; they also remained in the assessee's closing stock. The prior decision on the same assessee was followed, and the claim that equitable ownership had already passed was rejected. The agreement of 5 February 1948 was therefore not treated as a completed sale, and the amount was taxable in the assessee's hands.

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Issues: Whether the agreement dated 5 February 1948 amounted to a completed sale of the shares so that the sum of Rs. 3,59,559 was not taxable as the assessee's income.

Analysis: Shares are movable property and the passing of property depends on the intention of the parties, to be gathered from the contract and surrounding conduct. Under the Sale of Goods Act, property in specific or ascertained goods passes when the parties so intend, while a contract for specific goods in a deliverable state requires ascertainment of the goods and satisfaction of the statutory conditions governing transfer. On the facts, the shares were never delivered, never identified by serial numbers, no transfer forms or share scrips were handed over, no payment was made in 1948, and the shares continued to be shown in the assessee's closing stock. The earlier decision concerning the same assessee was followed, and the contention that equitable ownership had passed was rejected.

Conclusion: The agreement did not effect a completed sale on 5 February 1948, no equitable title passed to the purchasers, and the amount of Rs. 3,59,559 was taxable in the assessee's hands. The answer to the reference was therefore in favour of the revenue.

Ratio Decidendi: In a share transaction, title does not pass merely on an executory agreement unless the shares are ascertained and the transfer is completed in accordance with the parties' intention and the requirements governing transfer of movable property.

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