9911796707
TMI Blog1977 (7) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... a. Although the above named two persons of the respondent-firm were the registered shareholders in the abovementioned tea companies, in the balance-sheet of the respondent-firm the shares, inter alia, in the said companies were shown as stock-in-trade or assets of the said firm, and moneys received from the said tea companies were shown as deposits made by the said companies in the books of the firm. The revenue sought to reopen the assessment proceedings of the firm in regard to the assessment years 1955-56, 1957-58 and 1958-59, by three notices dated 15th January, 1968, and the assessment for the year 1959-60, by a notice dated 25th October, 1967, on the ground that these deposits or loans received by the above-mentioned partners who held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of section 23A, of any sum (whether as representing a part of the assets of the company or otherwise) by way of advance or loan to a shareholder or any payment by any such company on behalf or for the individual benefit of a shareholder, to the extent to which the company in either case possesses accumulated profits. " Mr. Sen, appearing on behalf of the revenue in this appeal, submitted that it was unfortunate that before the learned judges deciding the case of CIT v. C. P. Sarathy Mudaliar [1972] 83 ITR 170 (SC), the case of CIT v. Rameshwarlal Sanwarmal [1971] 82 ITR 628 (SC), decided by the Supreme Court only a few days before the above-mentioned case, was not cited and their Lordships did not have the benefit of looking at the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Lordships of the Supreme Court in the case of CIT v. Rameshwarlal Sanwarmal [1971] 82 ITR 628 followed the ratio of the above-mentioned case of Kishanchand Lunidasing Bajaj v. CIT [1966] 60 ITR 500 (SC) and came to the conclusion as mentioned hereinabove. The above-mentioned two sections came to be considered, as mentioned hereinabove, in CIT v. C. P. Sarathy Mudaliar [1972] 83 ITR 170 (SC). In that case facts were that members of a HUF acquired shares in a company with the funds of the family. Loans were granted to the HUF and the question was whether the loans could be treated as dividend income of the family falling within s. 2(6A)(e) of the I.T. Act, 1922. The Supreme Court held that loans and advances to shareholders could be deemed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an be assessed in respect of that income." Relying on a decision of the Gujarat High Court in the case of CIT v. Maneklal Harilal Spg. Mfg. Co. Ltd. [1977] 106 ITR 24, Mr. Sen submitted that if action under s. 147 was validly taken by the ITO on the basis of the law which at the relevant time was in force then the subsequent decision of the Supreme Court holding otherwise would not make such action had. It was further submitted that in the instant case subsequent pronouncement of the Supreme Court in CIT v. C. P. Sarathy Mudaliar [1972] 83 ITR 170 overruling the case in CIT v. Rameshwarlal Sanwarmal [1971] 82 ITR 628 (SC) would not, therefore, make the action taken for reopening of the assessment under s. 147(a) had although it may be t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t companies within the meaning of s. 2(22)(e) of the Act, and secondly, a " shareholder " must be construed strictly as has been done by the Supreme Court in CIT v. C. P. Sarathy Mudaliar [1972] 83 ITR 170. A shareholder is one whose name is registered as the owner or holder of the share in the register of shares of the company. Save and except such a shareholder nobody can be said to be a shareholder of a company. Companies Act, 1956, by s. 153 does not recognise any trust or beneficial interest of any person in any share. The I.T. Act being a taxing statute, in our opinion for the purpose of charging tax the expressions contained in the Act must be strictly construed. Admittedly, the respondent-firm is not a registered shareholder in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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