PROVAT KUMAR MITTER versus COMMISSIONER OF INCOME TAX, WEST BENGAL

Citation: [1961] 3 S.C.R. 37 · Decided: 08-12-1960 · Supreme Court of India · Bench: S.K. DAS · Disposal: Dismissed

Judgment (excerpt)

3 S. C.R. SUPREME COURT REPORTS 
37 
PROVAT KUMAR MITTER 
v. 
COMMISSIONER OF INCOME TAX, 
WEST BENGAL 
(S. K. DAs, M. HrnAYATULLAH and J.C. SHAH, JJ.) 
Income Tax-Assignment by shareholder of right lo dividend 
-Liability to lax of such share-holder-Indian Income-lax Act, 
I922 (II of 1922), SS. 16(r)(c), I6(3). 
The appellant who was the registered holder of 500 shares 
of a company executed a deed dated January 19, 1953. by which 
he assigned to his wife the right, title and interest to all divi-
dends and sums of money which might be declared or might 
become due on account or in respect of those shares for the term 
of her natural life. During the accounting year which ended 
on March 31, 1953, the dividend declared on the shares amount-
ed to Rs. 12,000, and in assessing the appellant for the assess-
ment year 1953-54 the Income-tax Officer included the said sum 
in his income under s. l6(1)(c) ands. 16(3) of the Indian Income-
tax Act, 1922. The appellant claimed that since the settlement 
was for the lifetime of his wife, the third proviso to s. 16(1)(c) 
applied and the dividend which his wife received could not be 
deemed to be his income under s. 16(1)(c), and that s. 16(3) was 
not applicable because there was no transfer of the shares to his 
wife. 
Held, that on its true construction the deed dated January 
19, 1953, was not a transfer of any existing property ofthe 
appellant namely, the shares held by him, but only a contract 
to transfer or make over in future every dividend and sum of 
money which may be declared or become due and payable on 
account or in respect of the shares, to his wife during her life-
time. Since tl)e company could pay the dividend only to the 
registered shareholder or under his orders. the income continu-
ed to accrue to the appellant though apptied subsequently to-
wards payment to the wife under the terms of the contract. 
The income, therefore, was assessable in the hands of the appel-
lant. 
Howrah Trading Co. Ltd. v. Commissioner of Income-tax, Cal-
cutta, [r959] Supp. 2 S.C.R. 448, relied on. 
Bacha F. Guzdar v. Commissioner of Income-tax, Bombay, 
[1955) r S.C.R. 876, held not applicable. 
Bejoy Singh Dhudhuria v. Commissioner of Income-tax. (1933) 
L.R. 60 I.A. 196, distinguished. 
, 
CIVIL APPELLATE JURISDICTION: 
Civil Appeal No. 
366 of 1959. 
Deeember 8. 
Provat Kumar 
Mitter 
v. 
Commissioner of 
Income Tax, 
Wll'sl Bengal 
S. K. Das]. 
38 
SUPREME COURT REPORTS 
[1961] 
Appeal from the judgment and order dated Septem-
ber 18, 1958, of the Calcutta High Court in Income 
Tax Reference No. 9 of 1955. 
S. Mitra and S. N. Mukherjee, for the appellant. 
K. N. Rajagopal Sastri and D. Gupta, for the res-
pondent .. 
1960. December 8. 
The Judgment of the Court 
was delivered by. 
S. K. DAS, J.-This is an appeal on a certificate of 
fitness granted by the High Court of Calcutta under 
s. 66A(2) of the Indian Income-tax Act, 1922. The 
assessee, Provat Kumar Mitter, is the appellant before 
us. He was a registered holder of 500 Ordinary shares 
of the Calcutta Agency Ltd. By a written instrument, 
dated January 19; 1953, he assigned to his wife, Ena 
Mitter, the right, title and interest to all dividends 
and sums of money which might be declared or might 
become due on account or in respect of those shares 
for the term of her natural life. We may read here 
the material portion of the instrument: 
"This Deed Witnesseth that for effecting the said 
desire and in consideration of the natural love and 
·affection of the Settlor for the Beneficiary the Set-
tlor as the beneficial owner assigns unto the Benefi. 
ciary the right, title and interest to every dividend 
and sum of money which may be declared or be-
come due and payable on account of or in respect 
of the said shares (not being the price or value 
thereof) and further hereby convenants with the 
Beneficiary to hand over and/or endorse over to the 
Beneficiary any dividend Warrant or any other 
document of title to such dividend or sum of money 
as aforesaid and to instruct the said Company to 
pay any such dividend or such sum of money to 
the Beneficiary To Hold the same unto the Benefi-
ciary absolutely during the term ·of her natural life. 
And It Is Hereby Agreed And Declared that the 
Beneficiary shall remain entitled to and shall re-
ceive and stand possessed absolutely of every divi-
dend and sum of money which she may receive on 
> 
3 S.C.R. SUPREME COURT REPORTS 
39 
account of the said shares during th

Excerpt shown. Read the full judgment & AI analysis in Lexace.