Let us assume that $\beta$ is a limit ordinal, in other words $\beta=\bigcup_{\beta'\in \beta}\beta'$. The inductive hypothesis is that, for every $\beta' \in \beta$, if $\alpha \in \beta'$ then $S(\alpha) \in S(\beta')$.
Let us assume that $\alpha \in \beta$. We are left to prove that $S(\alpha) \in S(\beta)$. As $\alpha \in \beta$, there is $\beta'\in \beta$ such that $\alpha \in \beta'$. By the inductive hypothesis $S(\alpha) \in S(\beta')=\beta' \cup \\{\beta'\\}$. Since $\beta' \in \beta$, $\beta' \subseteq \beta$ because $\beta$ is transitive. Hence: $$S(\alpha) \in S(\beta')=\beta' \cup \\{\beta'\\}\subseteq \beta \subseteq \beta \cup \\{\beta\\}=S(\beta)$$ and we are done.