After a raid conducted by the Chief Commissioner of Income Tax on Mr. Reddy, income tax liability was raised against him to a tune of ₹5 crores. Mr. Reddy immediately handed over shares standing in his name in Zinc Ltd.
CS Executive · Company Law · PYQS · December 2018
After a raid conducted by the Chief Commissioner of Income Tax on Mr. Reddy, income tax liability was raised against him to a tune of ₹5 crores. Mr. Reddy immediately handed over shares standing in his name in Zinc Ltd. worth of ₹5 crores. Chief Commissioner of Income Tax had lodged a share transfer with Zinc Ltd. to transfer the shares in favour of Chief Commissioner of Income Tax as a part of recovery of tax liability. Comment on the possibility of such transfer under the provisions of the Companies Act, 2013.
Answer & Explanation:
The Companies Act, 2013 contains no provisions with regard to the registration of shares in the name of a public office. Shares cannot, therefore, be registered in the names of public offices like the Collector of Central Excise or Chief Commissioner of Income Tax etc. Hence, the transfer lodged by Chief Commissioner of Income Tax to transfer the shares of Mr. Reddy is not tenable under the Companies Act, 2013.
Topics: Transfer and Transmission of Securities
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