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TMI Blog1971 (5) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... deceased's wife and sons were held by the deceased benami in the name of the wife and the sons. Since the wife had no beneficial interest in the shares, she could not be held to have become an absolute owner of these shares on the coming into force of the Hindu Succession Act, 1956. The applicant, who was the accountable person, felt aggrieved, and went up in appeal to the Central Board of Direct Taxes. The Board affirmed the finding that the deceased held shares in the two companies benami in the name of his wife, sons, etc., and that all such shares were liable to be included in his estate. The finding that the Hindu Succession Act did not help the deceased's wife was also affirmed. The accountable person applied under section 64(1) of the Estate Duty Act, 1953, for reference of certain questions of law to this court. The Board held that the finding that the shares were held by the deceased in the name of his wife and sons, etc., benami, was a finding of fact, and it did not raise any question of law. In the opinion of the Board, there was only one question of law involved in the case, and the same was referred. The question was: " Whether the shares allotted to the wife of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestions other than those which are questions of law directly related to the dispute between the taxpayer and the department, and which, when answered, would determine qua that question the dispute, be granted, we fail to see any ground for restricting that power when by an erroneous order the High Court has directed the Tribunal to state a case on a I question which did not arise out of the order of the Tribunal." The court then proceeded on to hold : " We are unable, therefore, to hold that at the hearing of a reference pursuant to an order calling upon the Tribunal to state a case, the High Court must proceed to answer the question without considering whether it arises out of the order of the Tribunal, whether it is a question of law, or whether it is academic, unnecessary or irrelevant. " It is thus clear that this Bench is not bound by the opinion expressed by the previous Bench that the finding regarding benami raised a question of law. We have to see for ourselves whether a question of law arises out of that finding. The decision of the Supreme Court in Sree Meenakshi Mills Ltd. v. Commissioner of Income-tax is a direct authority for the proposition that such a finding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... panies, Mitra Prakashan (P.) Ltd. and Maya Press (P.) Ltd. Under an agreement dated 29th May, 1953, the deceased agreed to transfer his publishing business to Mitra Prakashian (P.) Ltd. for a consideration of Rs. 2,07,500 and the printing business to Maya Press (P.) Ltd. for Rs. 1,64,800. It was agreed that the consideration would be paid by Mitra Prakashan (P.) Ltd. in the form of cash to the extent of Rs. 7,500 and the balance by allotting 2,000 fully paid up shares of the value of Rs. 100 each to the deceased or his nominee. The other company, namely, Maya Press (P.) Ltd., agreed to pay Rs. 4,800 in cash and the balance Rs. 1,60,000, in the form of 1,600 fully paid-up shares of the value of Rs. 100 each to be allotted in the name of the deceased or his nominee. In pursuance of this agreement, the business of Maya Press was transferred by the deceased on 1st July, 1953, to the two companies. On 24th January, 1954, the deceased wrote to, the two companies letters intimating that the shares be allotted to the following persons : Mitra Prakashan Ltd. Maya Press Ltd. Shares Shares 1. Shri K. M. Mitra (deceased) 500 223 2. Shri Aloke Mitra (son) 98 100 3. Shri Ashoke Mitra (son) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of shares in companies is as common as for any other type of property. There was no clear evidence to show that the dividends were actually utilised by the nominees. The dividends were only credited by book entry in the personal accounts of the deceased, his son, Aloke Mitra, and the wife. There was nothing to show that before his death, these amounts were actually withdrawn or utilised by his nominees. The Board, therefore, upheld the finding that the wife and sons were mere benamidars, the deceased being the real owner of the shares. The Board also confirmed the finding that section 14, Hindu Succession Act, was not attracted, because the wife did not have any interest in the shares. The finding that the deceased supplied the purchase money for all the shares allotted by the two companies, has not been disputed before us. The basic findings are that it has not been established that the wife or the sons enjoyed the dividend income of the shares which stood in their names, or that they exercised rights as shareholders without control of the deceased. Mr. Khare, appearing for the applicant, urged that the authorities below erred in ignoring relevant considerations like the moti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to do so, yet there are other considerations belonging to the subjec t; among others, a man may object to make his child independent of him in his lifetime, placing him in such a position as to enable him to leave his father's house and to die, leaving infant heirs, thus putting the property out of the control of the father. Various reasons may be urged against the abstract, propriety of the English rule. It is merely one of positive law, and not required by any rule of natural justice to be incorporated in any system of laws, recognising a purchase by one man in the name of another, to be for the benefit of the real purchaser." A perusal of the discussion in this case shows that it is an authority for holding that no presumption of advancement arises in India, because of adoption of the English form of conveyance (page 81), or because accounts stand in the name of the benamidar (page 82), or because the benamidar is a minor (page 81), or because the benamidar is the only son (page 80), or because memorials as to tenure are addressed to the Government in the name of the benamidar (page 82) or, because the person advancing the purchase money is bound to provide for the ostensible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds, the burden would shift, and, thereafter, it would be upon the benamidar to prove that a beneficial interest was intended to be conferred on him. The presumption is that the person who pays the money is the real owner, and not the person in whose name the property is purchased. This presumption is rebuttable. The burden lies on the ostensible owner to prove the other circumstances, for example, the intention to benefit, possession by receipt of rent and profits, or custody of the title deeds, the motive behind entering into the transaction. Thus, it was not for the department to prove the motive, or the possession and custody, or the realization of the income, etc. The applicant had to establish these facts. The basic finding of fact is that the applicant has failed to establish that the nominees utilised the dividend income of the shares. There is no evidence on the record (and none was pointed out to us) as to the motive impelling the deceased to get the shares allotted in the names of his sons and the wife. There is no evidence as to who had the custody or possession of title deeds of the shares. When there is no evidence on these aspects, the applicant, who had the burden o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Learned counsel relied upon the decision of the Andhra Pradesh High Court in Smt. Shastabai Jadhav v. Controller of Estate Duty. There, it was held that a garden valued at Rs. 35,000 was held by the husband benami in the name of his wife. It was observed that since the deceased husband could not dispose of the garden, as it was in the name of his wife, that property cannot be said to form part of the estate of the deceased. The argument that the wife herself, not having any real title, could not have transferred it, and that, in any event, any transfer by her would not pass the title to the purchaser, was repelled on the basis of section 41 Transfer of Property Act. section 41 states : " Where, with the consent, express or implied, of the persons interested in immovable property, a person is the ostensible owner of such property and transfers the same for consideration, the transfer shall not be voidable on the ground that the transferor was not authorised to make it : provided that the transferee after taking reasonable care to ascertain that the transferor had power to make the transfer, has acted in good faith. The Bench observed : ". . . so long as the document stands in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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