The, question of law referred to the High Court under section 66 1 of the Indian Incometax Act, 1922, to be hereinafter referred to as the Act is CC whether on the facts and in the circumstances of the case, the 10 79 amounts of Rs.
The first two of these companytentions were rejected by the Tribunal.
Sarathy was also the Managing Director of the aforesaid companypany and the Managing Directors remuneration too was treated and assessed as the income of the Hindu undivided family.
5,790/ and Rs.
The Tribunal repelled that companytention.
the hearing of the appeals.
The assessee in this case is a Hindu undivided family.
THE VEGETOLS, Ltd., a limited companypany to whom the amount was ultimately said to have been lent by the Hindu undivided family.
39,085/ companyld be deemed to be the dividend income of the Hindu undivided family in the respective assessment years?
Appeals by special leave from the judgment and order dated March 28, 1967 of the Andhra Pradesh High Court in Case Reference No.
The reasoning of the Tribunal will be found in paragraph 3 of its companymon order dated 18 1 1960.
It was companytended on behalf of the Revenue before the Tribunal that,the loan in question was advanced to the shareholders of the companypany.
There was numberdispute about that either.
5,790/ and Rs.
From the case stated it is number possible to state definitely as to how many companyarceners were there in that family.
There was numberdispute about that also.
The Tribunal found that these shares were acquired from out of the family funds.
Doraiswamy, Singaram and Sarathy were shareholders in a private limited companypany by name The Chittoor Motor Transport Co. Private Ltd. Doraiswamy and Singaram held 100 shares each in that companypany Sarathy held 2,797 shares.
Before the High Court the companynsel for the Revenue gave up the companytention that the loans in question were advanced to the shareholders of the companypany.
The Judgment of the Court was delivered by Hegde, J. This is an appeal by special leave from a decision of the Andhra Pradesh High Court.
Ultimately, the matter came up on appeal before the Tribunal.
CIVIL APPELLATE JURISDICTION Civil Appeals Nos.
Although in the Bombay case the provisions of Section 23A, wherein also there is a provision for treating the deemed dividend as the income of the shareholder, were being companysidered and in the instant case the provisions of section 2 6A e were to be companysidered, the Tribunal held that.
5,790/ and Rs.
Sen, R. N. Sachthey and B. D. Sharma, for the appellant in both the appeals .
39,085/ were treated as its dividend income falling within section 2 6A e of the Act in the respective years, The assessee disputed the inclusion on several grounds.
The re, in fact, was numberPayment by the aforesaid companypany by way of advance or loan to the Hindu undivided family and 1078 The deemed dividend companyld number be assessed is the income of the Hindu undivided family, the Hindu undivided family number being the shareholder to whom the payment of the advance or loan was made.
As ,regards the third companytention, relying on the interpretation given to the expression shareholder by the Bombay High Court in the case of S. C. Cambatta, 1946 14 I.T.R. 748, the Tribunal held that since the Hindu undivided family was number itself and also companyld number be the registered shareholder of the companypany, but it was the individual members who as such were the registered shareholders, the advance or loan to the Hindu undivided family, which was number a registered shareholder, companyld number be treated as the dividend income of the Hindu undivided family.
2 of 1961.
A companyy on the Tribunals order is Annexure A hereto and forms ,,Part of the case.
2242 and 2243 of 1968.
The first companytention, in fact, was expressly given up at the time of.
But we gather from the case stated that the three of the members of that family, viz.
It came to the companyclusion that though the shares were acquired from out of the family funds in law the shareholders were Doraiswamy, Sinuaram,and Sarathy and number their H.U.F. Hence, the loan advanced to the H.U.F. cannot be companysidered as loans advanced to the shareholders within the meaning of section 2 6A e .
In the two assessments made on the Hindu undivided family for the assessment years 1955 56 and 1956 57, for which the relevant previous vear s are the years ended 31 3 1955 and 31 3 1956, respectively, two sums of Rs.
The Income Tax Appellate Tribunal stated the case as fol lows Statement of Case The assessee is a Hindu undivided family of which the karta is Sarathy and there are two adult members, Doraiswamy and Singaram.
The facts found by the Tribunal did number afford any basis for that companytention.
On the other hand, he companytended that those loans had been advanced on behalf of or for the individual benefit of the shareholders.
Jayaram, for the respondent in both the appeals .
As regards the second, the Tribunal found as a fact that the payment of the advance or loan was to the Hindu undivided family and there was numberbasis for the claim that the advance or loan was really to another person viz.
the ratio of the Bombay case equally applied, as in both the sections, it was the artificial income that was sought to be taxed and the provisions of the law had, therefore, to be strictly companystrued.
There, is numberdispute about that.
The dividend earned on these shares was thus also the income of the Hindu undivided family and was being assessed accordingly.
Sarathy holds 2,797 shares, Doraiswamy 100 shares and Singaram 100 shares of a limited companypany by name The Chittoor Motor Transport Company Private Ltd., in which, the public are number substantially interested within the meaning of section 23A. The Shares were acquired with the funds of the Hindu undivided family and, therefore, the shares were the property of the Hindu undivided family.
39,085/could be deemed to, be the dividend income of the Hindu undivided family In the respective assessment years?
