RAMESHWAR LAL SANWARMAL vs COMMISSIONER OF INCOME-TAX, ASSAM

The Supreme Court held that 'deemed dividend' under Section 2(6A)(e) of the Income Tax Act can only be taxed in the hands of the registered shareholder, not the beneficial owner. The Court clarified that where shares are acquired with one person's funds but registered in another's name, the beneficial owner is liable for tax on dividends. The Court overturned the High Court's ruling in favor of the assessee and ruled in favor of the Revenue, emphasizing that loans to beneficial owners do not constitute 'deemed dividend'.