1 itxa3319-09 sas IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.3319 OF 2010 The Commissioner of Income Tax, Central-II, Mumbai ..Appellant. V/s. M/s. Growmore Exports Pvt. Ltd. ..Respondent. Mr. Vimal Gupta for the appellant. Mr. A.K. Jasani for the respondent. CORAM : J.P. DEVADHAR AND A.A.SAYED, JJ. DATED : 19TH JULY, 2011 P.C. :- 1. The following questions of law are raised by the revenue in this appeal :- (1) Whether on the facts and in the circumstances of the case, the Tribunal, in law, was right in holding that the dejure owner of the shares alone is entitled to receive the dividend declared by a company and though the assessee might be a defacto owner of the shares but had no rights to receive dividend from the company unless it is registered shareholder of the company ? (2) Whether on the facts and in the circumstances of the case, the Tribunal, in law, was right in holding that the dividend of Rs. 35,95,625/- has not accrued to the assessee and thereby holding 2 itxa3319-09 that such dividend income could not form part of the total income of the assessee ? (3) Whether on the facts and in the circumstances of the case, the Tribunal, in law, was right in accepting the assessee's submission that even though the amounts were paid for acquiring the shares, it has not been delivered to the assessee company and that the change in ownership of shares have not been registered and notified and therefore the assessee's name did not appear in the share registers of the respective companies on the record date and therefore it could not have received the dividend at all and while doing so the Tribunal failed to appreciate that (a) The registered holders of these shares are benami holders of the assessee and the purchase consideration would be inclusive of the cost of dividend to be declared. Being benami holders, the assessee is not keen to get the shares registered in its name though the benefits are enjoyed by the assessee. (b) The rule regarding declaration and payment of dividend under the Companies Act and Security and Contract Regulation Act are only regulatory thing which do not stand in the way of receiving the dividend income due to the assessee company through benami holding. (c) The assessee company in the event of being notified under (TORTS) Act, 1992 ought to have approached the Special Court for the necessary permission to include the share transactions in its books of accounts. (d) That the Income Tax Law do not recognize the tax liability of such income in the circumstances described above. (4) Whether on the facts and in the circumstances of the case, the Tribunal, in law, was right in holding that interest expenditure of Rs.19,12,719/- on late payment of debenture allotment and call money of L & T Ltd. is a revenue expenditure allowable, ignoring the fact that the said expenditure is a capital expenditure, having direct nexus to the cost of debentures acquired by the assessee and will increase the cost of debentures ? 2. As regards the first three questions are concerned, counsel 3 itxa3319-09 for the parties state that the first three questions are answered against the revenue by the decision of this Court in the case of CIT V/s. Aatur Holdings P. Ltd. reported in [2008] 302 ITR 92 (Bom). Hence the first three questions cannot be entertained. 3. As regards the fourth question is concerned, the finding of fact recorded by the Tribunal is that the interest paid by the assessee related to debentures and the same being in the nature of loan, the interest liability is allowable. We see no fault in the order of the ITAT. Therefore, the fourth question cannot be entertained. 4. In the result, the appeal is dismissed with no order as to costs. (A.A. SAYED, J.) (J.P. DEVADHAR, J.)