Registered shareholder rule limits deemed dividend taxation under section 23A where assessee was not shareholder.

Section 23A of the Indian Income-tax Act applied only to the registered shareholder, because the deemed dividend arose from a statutory fiction attaching to that legal status. The earlier Supreme Court authority on section 23A was treated as controlling, and a later decision under different provisions did not alter that principle. On the facts, the shares formerly held by a dissolved firm had passed to a private limited company, not to the assessee, so there was no basis to assess him as the real owner. The deemed dividend could not therefore be included in the assessee's income.

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Issues: Whether the amount deemed as dividend under section 23A of the Indian Income-tax Act could be included in the assessee's income when he was not the registered shareholder.

Analysis: The assessment under section 23A attaches to the registered shareholder, because the dividend is a deemed distribution under the statutory fiction created by that provision. The reasoning in the earlier Supreme Court authority on section 23A was held to be controlling, and the later decision dealing with different provisions did not displace that principle. On the facts, the shares held by the dissolved firm had in any event been taken over by the private limited company, not by the assessee, so there was no basis to assess the assessee as the real owner of the shares.

Conclusion: The deemed dividend could not be assessed in the hands of the assessee, who was not the registered shareholder.

Ratio Decidendi: For purposes of section 23A of the Indian Income-tax Act, the term "shareholder" means the registered shareholder, and deemed dividend under that provision cannot be assessed in the hands of a person who is not such registered shareholder.

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