Benami share ownership: dividend income is taxable in the hands of the beneficial owner despite registration in relatives' names.

Dividend income from shares held benami in the names of the assessee's wife and sons was taxable in the assessee's hands where the record showed that the shares had been acquired out of his funds and belonged beneficially to him. The fact that the relatives were the registered holders did not alter real ownership or shift the tax incidence away from the beneficial owner. Once benami ownership was established, ownership was treated as continuing in the assessee unless a later divestment was shown, and no such divestment was proved. The principle applied is that dividend accrues to the real owner, not merely the registered shareholder, when beneficial title rests with the assessee.

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Issues: Whether dividend income from shares standing in the names of the assessee's wife and sons, but found to have been acquired out of the assessee's funds and held benami, was assessable in the hands of the assessee.

Analysis: The shares were treated in the case as having been acquired out of the assessee's profits, and the record contained an admission that the shares standing in the names of the wife and sons belonged to the assessee and were his investments. On that footing, the assessee was the real owner of the shares, and the mere fact that the wife and sons were the registered holders did not prevent the dividend from being taxed in the hands of the real owner. The earlier distinction drawn in cases dealing with registered shareholders was not applicable where the factual foundation showed real ownership in the assessee. Once the shares were held benami, ownership was presumed to continue in the assessee unless a subsequent divestment was shown, which was not done.

Conclusion: The dividend income from the shares was rightly included in the assessee's assessable income, and the contention that it could be assessed only in the hands of the wife and sons failed.

Ratio Decidendi: Where shares are found to belong beneficially to the assessee and are held benami in the names of relatives, dividend income accrues to the real owner and is taxable in his hands notwithstanding registration in other names.

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