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Issues:
1. Whether the undistributed income of a company should be assessed in the hands of the Hindu undivided family or the registered shareholders. 2. The impact of the interpretation of relevant provisions of the law on the assessment of income under section 23A of the Indian Income-tax Act. Analysis: 1. The judgment pertains to the assessment of undistributed income of a company owned by a Hindu undivided family. The Income-tax Officer invoked section 23A of the Income-tax Act to deem the undistributed income as dividends amongst the shareholders. The question was whether the amount should be assessed in the hands of the Hindu undivided family or the registered shareholders. Referring to the decision in Cambatta v. Commissioner of Income-tax [1946] 14 ITR 748, the court held that the income should be assessed in the hands of the registered shareholders, not the Hindu undivided family. The court emphasized that the provisions regarding grossing up and income tax payment apply to the registered shareholder, not the beneficial owner. Therefore, the income in question did not fall to be assessed in the hands of the Hindu undivided family but in the hands of individual shareholders. 2. The Tribunal, in its order, expressed dissatisfaction with the interpretation given by the court in Cambatta's case, stating that it defeated the purpose of section 23A. However, the court emphasized that it was bound by the decision of the Division Bench in Cambatta's case and had to follow it. The court highlighted that the Hindu undivided family, not being a registered holder, cannot be taxed on the income deemed to be distributed under section 23A. Despite the Tribunal's opinion on the interpretation, the court reiterated its obligation to adhere to the precedent set by the earlier decision. The court declined to address a second question raised, as it was contingent on the first question being answered in the affirmative, which was not the case in this instance.
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