TaxTMI 
TaxTMI 
1967 (9) TMI 1
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....two questions relate to two separate orders of assessment, the question to be answered is in substance only one. In order to understand the precise nature of the question, it is desirable to reproduce the pedigree-table of the assessee, L. Bansi Dhar : L. Bishambhar Das (deceased) | ---------------------------------------------------------------------------------------------------------------------------------- | | | L. Girdhari Lal L. Madan Mohan Lall L. Gopai Rai (deceased) | (deceased) ---------------------------------------------------------------------------------------------------------------- | | Sir Shri Ram Sir Shankar Lal | -----------------------------------------------------------------------------------------------....
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....vely) of the deceased shareholder from time to time, such portion of the said dividend as will give, when divided between the daughters, to each living daughter one-fourth of what may be left to each of the sons or his descendants or the successors of the descendants. The payments mentioned in sub-clauses (1) and (2) hereof shall be a first charge on the said dividends and may be made direct by this company out of the said dividends." L. Murlidhar, father of L. Bansi Dhar, assessee, died in an air crash in 1949, leaving behind two sons L. Shri Dhar and L. Bansi Dhar, along with two daughters, Smt. Sushila and Smt. Gayatri. The company, it seems, in terms of article 7(e) paid the proportionate dividends to Smt. Sushila and Smt. Gayatri dir....
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....areholder registered in the books of the company and for this submission, he has referred to a decision of the Supreme Court in Commissioner of Income-tax v. Shakuntala. This view is sought to be fortified by the ratio of a still earlier decision of the Supreme Court in Howrah Trading Co. v. Commissioner of Income-tax. Shri Kirpal has in this connection tried to distinguish the Privy Council decision relied on by the Appellate Tribunal in Raja Bejoy Singh Dudhuria's case. Shri B. Sen, learned counsel for the assessee-respondent, has, to begin with, placed reliance on section 36 of the Companies Act, 1956, which is substantially the same as section 31 of the old Act of 1913 and has urged that the articles of association of a company are bin....
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....st, says Shri Kirpal. He has also made a reference to the decision of the Supreme Court in Provat Kumar Mitter v. Commissioner of Income-tax, and to a decision of the Privy Council in P. C. Mullick v. Commissioner of Income-tax. The true legal position, in our view, is that the person in whose name the shares of a company stand registered is to be considered to be the owner thereof and the income by way of dividends yielded by such shares is ordinarily to be considered as assessable income, but the dividends must in law come to his hands, whether in actual fact or constructively. The constructive receipt would include cases where the law creates a fictional or notional income not in fact received by a shareholder. In cases where the amount....
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....hat the amount of dividends is diverted at the source by an overriding title before it started flowing into the channel which was to reach the assessee concerned. This diverted amount of dividends may perhaps be liable to assessment in the hands of the ladies, but the assessee before us is certainly not liable to be assessed on this amount. The amount required under the articles of association to be paid to the widow and the daughters can by no means be reasonably considered to be an instance of the application of the respondent's own income after it had accrued to him. On the other hand, it was a diversion at the source from which both the assessee's right and that of the widow and the daughters of the deceased started flowing in different....