POPATLAL BHIKAMCHAND Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) (1) The assesee was the holder of 350 shares of the shree Ram Mills Ltd., On 2812-1946, the assessee gifted these shares to his ninor son Virendra. Under S.16(3)(a)(iv)of the Income - Tax Act, the dividend income fromthese 350 shares was liable to be included in computing the total income of the assessee for the purpose of assessment. Onm 9.8.1947, the directors of the Shree Ram Mills,. Ltd, resolved to recommend the issue of bonus shares by increasing the capital of the company and a certain number of bonus shares were issued in the name of the assesse's minor son Virendra. There was a further increase in the capital of the company on 30.12.1947, and certain additional bonus shares were issued in his name. VIRENDRA. The minor son of the assessee, was thus alloted 744 bonus shares for is original holding of 350 shares. The Income Tax Officer held that the 350 shares originally transferred by the assessee and the 744 bonus shares were "assets trnasferred y the assessee, and computed his total income under S.16(3) of the Income Tax Act by including the dividend income from all these shares. The appellate assistant Commissioner of Income Tax and the Income Tax Appellate Tribunal confirmed the order of the IncomeTax Officer. At he request of the assessee the Tribunal has refgerred for decision the question whether "the dividend income from the 744 bonus shares held by the assessee's minor son is taxable in the hands of the assessee under S.16(3) of the Income Tax Act.''

(2.) SECTION 16(3)of the Income - Tax Act in so far as it is material provides: