HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Commissioner of Income-tax, Bombay City II v. Shakuntala and Two Others etc.
Civil Appeals Nos. 125, 231 and 447 of 1960
[1962] 2 SCR 871 ·
Indian Income-tax Act, 1922: section 23A as it stood before the Finance Act, 1955; sections 16(2), 18(5), 23 and 34
Sources & disclosures includedDownload original judgment / order
3-judge bench; unanimous judgment delivered by S. K. Das, J. · S. K. Das, J. · M. Hidayatullah, J. · J. C. Shah, J.
Assessment years: 1949-50
01 · Facts of the case
The leading reference concerned an HUF beneficially owning 1,842 company shares registered in individual family members' names. For assessment year 1949-50 the officer invoked section 23A and included Rs.54,307 of grossed-up notional dividend in the HUF's income. The Tribunal deleted the addition and the High Court agreed; three similar Revenue appeals were heard together (SCR pp.872-875; PDF pp.2-5).
Source: Primary judgment: facts
02 · Discussion by the Hon’ble Court
Section 23A created notional dividend requiring a subsequent shareholder assessment. Its express recipient was the registered shareholder, consistently with section 18(5), not the beneficial owner. Anti-avoidance purpose and the principle of carrying a legal fiction to its conclusion could not extend the fiction beyond the section's words or cure a supposed statutory gap (SCR pp.875-879; PDF pp.5-9).
Source: Primary judgment: discussion
03 · Judicial decision
All three Revenue appeals were dismissed with costs and one hearing fee. The High Court's answer for the assessees was upheld; its second referred question consequently did not arise for consideration (SCR pp.879-880; PDF pp.9-10).
Source: Primary judgment: decision
04 · Outcome / in whose favour
In favour of the assessees: the HUF could not be assessed on this section 23A notional dividend merely as beneficial owner; assessment under the provision belonged to the registered shareholders (SCR pp.878-880; PDF pp.8-10).
Source: Primary judgment: outcome
05 · AKHB REVIEW POINT
AKHB analysis: identify the statutory recipient and precise reach of the deemed-income rule before looking through registered ownership. Distinguish this historic notional distribution from actual dividend receipt and later statutory definitions; beneficial ownership alone did not answer the specific section 23A question.
Source: Primary judgment: review point
Source & verification
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Statutory scope
Pre-1955 section 23A of the 1922 Act; neither current deemed-dividend law nor taxation of actually distributed dividends was decided.
Later treatment
Source checked 2026-10-11. Later judicial treatment and current statutory applicability have not been comprehensively checked; no current-law or citator clearance is represented.
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