COMMISSIONER OF INCOME-TAX, BOMBAYCITY II vs SHAKUNTALA AND TWO OTHERS ETC.

The Supreme Court ruled that under Section 23A of the Indian Income-tax Act, 1922, the deemed distribution of undistributed income as dividend must be assessed in the hands of the registered shareholders, not the Hindu undivided family (HUF) that benefits from the shares. The Court clarified that the term 'shareholder' in Section 23A refers specifically to those listed in the company's register, thereby excluding the HUF from being treated as a shareholder. The judgment upheld the principle that the fiction created by the legislature must adhere strictly to the statute's language.