THE INCOME TAX OFFICER vs ARVIND N. MAFATLAL

The Supreme Court held that under Section 16(2) and Section 18(5) of the Income Tax Act, 1922, only registered shareholders are entitled to the benefit of tax credits and grossing up. The Court ruled that the Income-tax Officer erred in treating the dividend attributable to shares held by partners as income of the firm, as the shares were registered in the names of individual partners. The Court affirmed that the Income-tax Officer has jurisdiction under Section 36 to rectify errors but cannot make mere readjustments to avoid illogicalities.