1974 (7) TMI 24 - HC - Income Tax

Summary

Issues:
- Whether the assessee should be given credit for the tax deducted at source on dividends derived from shares held in another person's name?

Analysis:
The case involved a dispute regarding the entitlement of the assessee to receive credit for tax deducted at source on dividends from shares held in the name of another person. The assessee, represented by trustees, claimed that the tax deducted at source should be credited to her as the beneficiary under the trust deed. The Income-tax Officer initially denied the credit, but the Appellate Assistant Commissioner and the Tribunal ruled in favor of the assessee, citing the special position of the person in whose name the shares were held. The Tribunal held that the provisions of rule 30A applied, entitling the assessee to the credit. However, the Revenue contended that the assessee did not fall under the categories specified in section 199 of the Income-tax Act, which entitle a person to receive credit for tax deducted at source.

The court analyzed the relevant provisions of the Income-tax Act, specifically sections 18(5) and 199, which deal with deductions made on behalf of different classes of persons, including shareholders. The court noted that the dispute in this case pertained to income deducted at source on dividends, placing the assessee under the category of shareholders. The court highlighted that rule 30A, which the assessee relied on, required specific circumstances to be met for credit to be given, which were not applicable in this case. Additionally, the court emphasized the necessity of the assessee being a registered shareholder to claim the benefit of credit for tax deducted at source.

Furthermore, the court referred to previous judicial interpretations regarding the definition of a "shareholder" for the purpose of claiming credit for tax deducted at source. The court cited cases where it was established that only registered shareholders are entitled to such credit. The court rejected the argument that the real owner, even if not the registered shareholder, could claim the benefit under section 199. The court emphasized that the beneficiary, in this case, the assessee, must be a registered shareholder to be eligible for the relief claimed.

Ultimately, the court ruled against the assessee, stating that as the assessee was not a registered shareholder and did not fulfill the necessary requirements under the Income-tax Act, she was not entitled to the credit for tax deducted at source on the dividends received. The court held that the absence of a certificate filed by the assessee further supported the denial of the relief claimed. Consequently, the reference was answered in the negative, in favor of the Revenue, with no costs awarded.