TaxTMI 
TaxTMI 
2008 (3) TMI 112
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....ugh the assessee company might be defacto owner of shares but had no right to receive the dividend from the company unless it is the registered shareholder of the company ? (ii) Whether on facts and in circumstances of the case, the ITAT was right in law in holding that the dividend of Rs.16,84,150/- has not accrued to the assessee and thereby holding that such dividend income could not form part of the total income of the assessee ? (iii) Whether on facts and circumstances of the case, the ITAT was right in law, in accepting the assessee's submission, that even though the amounts were paid for acquiring the shares, shares have not been delivered to the assessee company and the change in ownership of the shares have not been registere....
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....itted by the learned Counsel that as the assessee has paid the consideration, for all purposes they are the owners of the shares and consequently the dividend ought to be assessed in the hands of such a person. On the other hand on behalf of the assessee, it is submitted that the shares are not registered in their name in the books of the company and the dividend has been paid to the person in whose name the shares were registered. It is therefore, submitted that this cannot be income in the hands of the assessee and consequently no fault can be found with the orders of either ITAT or the Commissioner (Appeals). 5. To consider the contention, we shall first refer to the provisions of Section 206 of the Indian Companies Act. The relevant ....
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....id securities, is entitled to receive and retain any dividend declared by the company, notwithstanding that the said security has already been transferred by him for consideration, unless the transferee who claims the dividend from the transferor has lodged all the documents which must be required by the company for the registeration. In the event this has been done, then section 27(2) (b) reserves the right of such a transferee to enforce against the transferor or any other person his righ, if any, in relation to the transfer where the company has refused to register the transfer of the security in the name of the transferee. It is thus clear that under this provision also it is the registered shareholder alone who would be entitled to rec....
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.... which such dividend can be taxed in the hands of the assessee. 11. The other aspect of the matter which needs to be considered is that the burden of proving that an amount was taxable because it was received in the year of account lies upon the department. This proposition has been reiterated in CIT V/s. Bikaner Trading Co.Ltd., reported in [1970] 78 ITR 12. Income of the assessee has to be received by the assessee as income tax is levied on income. For this purpose we may refer judgment of the Supreme Court in CIT V/s. M/s. Shoorji Vallabhadas & Co. reported in [1962] 46 ITR 144 which was reiterated in Godhra Electricity Co. Ltd., V/s. CIT reported in [1997] 225 ITR 746. The Supreme Court summed up the law as under :(head note) ....