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TMI Blog1996 (1) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... t after hearing learned counsel for the parties the crucial question is as to whether the registration in the matter of transfer of share certificate would relate to the date of the submission of the application form for the said purpose and the question whether, as is now sought to be contended, the transfer on the basis of the application would be considered to be proper and legal, would be the only aspect that would require consideration and consequential decision. In fact, during the course of hearing of the reference before us, the first question that the registration relates back to the date of the application in question was not in serious dispute in view of the settled position in regard thereto. The facts are in a narrow compass. The assessee is a shareholder of Kanthimathi Plantations Pvt. Ltd. The year of assessment in question is 1979-80. At the commencement of the year in question the assessee was the owner of 40,600 shares out of a total of Rs. 1,50,100 shares of the company. It is seen that the assessee had borrowed a sum of Rs. 6,25,000 from the company. In this connection, the question that came up before the Income-tax Officer was whether this loan amount of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find out as to whether the material is acceptable in support of the contention of genuineness of the transaction and observed that there is no clear evidence brought on record to doubt the evidence of Mr. Moraes, an advocate of the company, who is also the director thereof, to doubt the transaction in any manner. In fact, the appellate authority has observed that the deponent, not only deposed but also filed an affidavit in support thereof has not been crossexamined in any manner. The appellate authority has considered this aspect by referring to certain peculiarities of the company to the effect that none of the shareholders of the company was the director thereof. The appellate authority also observed that there is no material to the effect that the affidavit of the director who is also an advocate is not reliable. The fact-finding authority has also pinpointed that no attempt has been made to find out any material in regard to the evidence on record. It appears that initially there was a legal advice to the effect that the shares could not be registered in the name of minor children. After considering the facets of such legal advice, it appears that ultimately a decision was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o this period, the Tribunal has considered the reasons for the delay in registering the transfer of shares in the company's books, and it is emphasised in regard thereto that in addition to the affidavit, Shri Ramaswami Iyer, the director of the company, was also examined before the Income-tax Officer and he explained that this was because of the initial opinion that the shares cannot be transferred in the name of the minors, which position was required to be clarified. It is on the basis of these materials, the Tribunal observed that all these aspects that are placed on record would clearly point out the genuineness of the gift of 11,000 shares of the assessee in favour of her daughter's minor children. The Tribunal has also referred to the correspondence of the advocate, Shri C. Krishnan Nair, dated February 20, 1980, giving an opinion in the nature of legal advice that the shares could be legally transferred in the name of the minors who are looked after by a proper legal guardian. In fact, it will have to be observed that this is one of the first elementary principles of the law of contract settled years ago by the judgment of the Privy Council in Mohori Bibee v. Dharmodas Ghos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the Companies Act. It is urged in this connection that the requirements of both these enactments would show that without an anterior transfer, anterior in point of time with regard to the submission of the application for transfer before the Registrar of Companies there would be no satisfactory establishment in regard thereto. In other words, learned counsel urged that there should be first a transfer properly made of the shares which should then be presented along with the share certificate to the board of directors either by the transferor or by the transferee for the change of registration in respect of them and until such a change is effected in the books of the company, the transferor will continue to be the holder of the shares. Learned counsel in support of the submission placed reliance on the two decisions R. Subba Naidu v. CGT [1969] 73 ITR 794 (Mad) and CWT v. Babulal Jatia [1982] 137 ITR 540 (Cal). The proposition enunciated by the decisions placed for our consideration would not entertain any dispute whatsoever. Gift will have to be established and on the basis thereof an application for transfer could be considered, and both these aspects would require satisfa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision of the other Act. As far as the requirements of transfer are concerned, in paragraph 9 of the said judgment substantial requirements are succinctly reproduced placing on record the different facets of the situation as provided by sections 122 and 123 of the Transfer of Property Act. It is emphasised by way of a declaration of law that the substantial requirements are : (1) The donor must transfer property which is the subject-matter of the gift, voluntarily and without consideration ; and (2) the donee must accept it during the lifetime of the donor or while the donor's competence to give exists. It is also observed by reference to the provisions of section 123 of the Transfer of Property Act that the mode of transfer lays down that the transfer may be effected either by a registered instrument signed by the donor and attested by at least two witnesses or by delivery. It is emphasised that no special mode of delivery is specified, but the delivery may be made in such a way as the goods sold are delivered. Therefore, the position appears to be crystal clear that a registered document is not a must and even so the gift could be properly understood as effective if the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tuation as to whether a delayed registration would relate to a situation back to the date of filing of the application form in the matter of determination of the rights of the assessee to get exclusion of the amount of Rs. 6,25,000 and whether as otherwise con tended by the Department that the said amount would have to be treated as deemed dividend. We must record that there has been no whisper in the process and at any rate for the purpose of asking for questions to be referred as framed hereinbefore. Apart therefrom the question can be looked at again in another way. It is already settled that an application for transfer can be initiated either by the transferor or by the transferee. The question is as to what are the requirements of the provisions of the Companies Act in regard thereto. Learned counsel for the assessee referred us to the provisions of section 108 of the Companies Act specifying that the transfer of shares is not to be registered except on production of instrument of transfer. The said statutory provision prohibits the company from registering a transfer of shares, unless a proper instrument of transfer duly stamped and executed by or on behalf of the transfe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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