1993 (6) TMI 5

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..... dors had handed over the share scrips together with the blank transfer forms to the guarantor ? (2) Whether, the Tribunal has rightly deleted Rs. 2,98,605 dividend income from the total income of the assessee ? " The assessee is an individual, and the relevant assessment year is 1970-71. The crux of the matter is whether the property in shares held by James Finlay and Company Limited passed to the purchasers. The assessee and his brother, Ratansinh Mulji (" purchasers "), jointly agreed with James Finlay and Co. Ltd., Glasgow (" vendors ") to purchase the shares in three textile mills, viz., Swan Mills Limited, Finlay Mills Limited and Gold Mohur Mills Limited, at a total price of Rs. 94,82,181 by an agreement dated February 20, 1968. U .....

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..... , disclosed the same to be their income and were assessed accordingly. The remaining four-fifths of the vendor's shareholding in the three companies stood deposited with the insurance company in terms of the said agreement. The dividend received on that portion of the shareholdings, which was in the custody of the insurance company, was received by the insurance company for and on behalf of the vendors and was made over to them. Did the purchasers become owners of the entire shareholding of the vendors including the remaining four-fifths portion during that previous year, was the controversy. According to the assessee, there was no actual transfer of all the shares under the sale agreement, and the transfer took place only at the time when .....

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..... the goods passes when it is intended to pass. It could not be said that the property in goods was intended to pass irrespective of the date of payment of instalments. The sale could not be held to be complete on the purchasers furnishing the irrevocable guarantee from the insurance company. The insurance company, under the circumstances, held the shares in trust for the vendors. Under the specific terms of the agreement, the vendors had retained the right to receive the dividend till such time as the instalments were fully paid. In this background, it is clear that the dividend income could not become the income of the purchasers. Under the circumstances, both the questions are answered in the affirmative, and in favour of the assessee. .....

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