AI Drafter 
TaxTMI 
TaxTMI 
1974 (7) TMI 24
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....a ? " The facts culminating in this reference are these : The assessee is one Smt. Batool Begum. She was assessed through the trustees of the Nizam's Supplemental Family Trust on the income from dividends in respect of certain shares in some companies. The shares were all held in the name of Shri C. B. Taraporewala, the executive officer of the trust. The Income-tax Officer did not give credit for the tax deducted at source on the ground that rule 30A of the Income-tax Rules does not cover the case. But on appeal, the Appellate Assistant Commissioner upheld the assessee's claim and directed the Income-tax Officer to give credit to the extent of the amount of tax deducted at source on the divide and income. The department then unsuccessfu....
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....s the Nizam could not figure as a shareholder, his attorney, Mr. Taraporewala, figured as a shareholder in the registers of the company and in fact Mr. Taraporewala did nothing more than act as a post office or conduit pipe between the trustee and the company in the matter of receiving dividends. It is in that view that the Tribunal came to the conclusion that the cases of the Supreme Court including the case of Kishanchand Lunidasing Bajaj are not applicable to the facts of the case. It is also of the view that in all those cases the Supreme Court was concerned with the construction of sub-section (5) of section 18 relating to grossing up of income and, therefore, the opinion expressed in those decisions will have no application to the pec....
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....ose income the deduction was made, or of the owner of the security or of the shareholder, as the case may be, and credit shall be given to him for the amount so deducted on the production of the certificate furnished under section 203 in the assessment (including at provisional assessment under section 141A), if any, made for the immediately following assessment year under this Act." Both the sections 18(5) and 199 speak of deductions made on behalf of three classes of persons: (1) on behalf of a person from whose income deduction was made, (2) the owner of the security, and (3) the shareholder. What is necessary to entitle a person to have credit for the tax deducted is that he must have paid tax under one or other of the foregoing sect....
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....any share is assessable as the income of a person other than the shareholder, any deduction made in accordance with section 194 and paid to the Central Government, shall be deemed to be at payment of tax on behalf of, and the credit in respect thereof shall be given to, such other person in the circumstances specified below, namely :--......" The assessee does not come within any one of the circumstances specified in clauses (i) to (x) of the said rule. Rule 30A is subject to sub-rule (2) of the same rule and this sub-rule lays down: " The credit referred to in sub-rule (1) shall not be given unless the person entitled to such credit furnishes to the Income-tax Officer a declaration in Form No. 15B made by him and the shareholder conc....
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.... company in respect of those shares, and claim credit for the tax deducted at source, under section 18(5) of the Act. " In Income-tax Officer North Satara v. Arvind N. Mafatlal the Supreme Court again held: " It is only the registered shareholder who is entitled to the benefit of the credit for tax paid by the company under section 18(5) as well as the corresponding grossing up under section 16(2). " In Kishanchand Lunidasing Bajaj v. Commissioner of Income-tax, Shah (as he then was), after referring to the earlier cases of the court, clearly stated : " We are unable to accept the argument of counsel for the appellants that because the dividend income in respect of the shares cannot be ' grossed up ', and credit for tax paid can....
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....act that the Nizam was a sovereign ruler or had enjoyed special privileges and prerogatives does not at all help the case of the assessee. To be entitled to the benefit of section 199, the assessee's name must find place in the register of shareholders. In the absence of her being such a shareholder, she is not entitled to the relief claimed. Admittedly, no certificate was filed by the assessee as required by section 203 of the Income-tax Act, 1961. Section 203 reads: " 203. Every person deducting tax in accordance with the provisions of sections 192 to 194, section 194A and section 195 shall, at the time of credit or payment of the sum, or, as the case may be, at the time of issue of a cheque or warrant for payment of any dividend to....