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Issues: Whether the gifts of shares were completed on delivery of the share certificates and transfer deeds to the donees or only on registration of the shares in the company's register, and consequently whether the gifts were taxable under the Gift-tax Act, 1958.
Analysis: A transfer of shares, as between donor and donee, is complete when the donor has done all that is necessary to divest beneficial interest and the donee has accepted the gift. Registration in the company's books concerns the company's recognition of the transfer and does not govern the passing of beneficial ownership inter se the parties. The transferor may continue as legal holder until registration, but equity treats the transferee as the beneficial owner, the transferor holding the shares as constructive trustee to the extent necessary. On the facts, the share certificates were delivered along with transfer deeds on 26 November 1956, and the company's later registration did not postpone completion of the gifts.
Conclusion: The gifts were completed on 26 November 1956 on delivery of the share certificates and transfer deeds, and not on the later dates of registration.
Ratio Decidendi: For gift-tax purposes, a gift of shares is complete when beneficial ownership passes by delivery and acceptance, even though registration in the company's books takes place later.
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