TMI Blog1981 (1) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... daipur Mineral Development Syndicate Pvt. Ltd., were liable to be assessed in the hands of the assessee as dividends under section 2(6A)(e) of the Indian Income-tax Act, 1922 ? " The facts in a nutshell necessary for the decision of this reference are : Shri Harish Chandra Golecha is a shareholder and director of M/s. Jaipur Mineral Development Syndicate Pvt. Ltd. and of M/s. Udaipur Mineral Development Syndicate Pvt. Ltd., hereinafter referred to as " JMDS " and " UMDS ", respectively. Harish Chandra Golecha is also the karta of the joint Hindu family-assessee. The assessment years are 1960-61 and 1963-64. The assessee owed under the following accounts to the above-noted corporations for the assessment year 1960-61. 1. JMDS Pvt. Ltd. Rs. 1,75,810. 2. UMDS Pvt. Ltd. Rs. 19,675. The authority assessing the petitioner was of the opinion that the companies possessed sufficient amounts by way of accumulated profits for the assessment year 1960-61, though they were, not shown in their respective balance-sheets and both the companies created secret reserves by writing off a part of their goodwill by transferring amounts from their general reserve account, that apart from the ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deemed a dividend within the meaning of s. 2(6A)(e) of the Indian I.T. Act, 1922. He further held that the house situated at Bhagwandas Road, C-Scheme Jaipur, standing in the name of Chandrakanta Devi also belonged to the HUF and assessed the assessee on a total income of Rs. 2,85,923. Vide order dated March 28, 1968, the appeal filed by the assessee before the AAC succeeded and, thereafter, the ITO filed Appeal No. 989/1969-70. As regards the house property, the Appellate Tribunal held that by a separate consolidated order I.T. Appeals Nos. 249 and 250 of 1969-70 dated September 20, 1971, the Tribunal had already held that the income from the house should be included in the total income of the assessee. The Appellate Tribunal held that the company at the relevant time had written off Rs. 12 lakhs out of its reserves and surplus towards the reduction in the value of its goodwill from Rs. 13,25,000 and these amounts were secret reserves. Besides that, the provision for taxation and various other substantial provisions were also created by the company out of its proceeds and as such the company was possessed of sufficient accumulated profits so as to render the advance in question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this question. Learned counsel for the revenue urged that s. 66, which confers jurisdiction upon the High Court, only permits the reference of a question of law arising out of the order of the Tribunal, It does not confer jurisdiction on the High Court to decide a different question of law not arising out of such order. He further urged that as the Tribunal was not called upon to apply its mind to the question raised, it would be unreasonable to characterise the order of the Tribunal as incorrect. In support of the above contention, he placed reliance on Mrs. Kusumben D. Mahadevia v. CIT [1960] 39 ITR 540 (SC), Keshav Mills Co. Ltd. v. CIT [1965] 56 ITR 365 (SC), CIT v. Mewar Textile Mills Ltd. [1966] 60 ITR 423 (SC) and CIT v. Banwari Lal Agarwal [1971] 80 ITR 326 (SC). Learned counsel for the assessee urged that question No. 2 referred by the Tribunal is in general terms and in dealing with it several aspects need to be considered, and, even if one of those aspects has not been appreciated by the Tribunal, it is the duty of this court to consider the same. Learned counsel urged that the main question in the case is whether the above-noted two sums advanced by the two companies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pression " question of law arising out of such order " in s. 66 cannot be restricted only to those questions which have been argued and decided by the Tribunal. Sometimes a question of law is raised before the Tribunal but an aspect of that question is neither raised nor decided. In those circumstances, other aspects of the same question can be allowed to be urged before the court. In the case on hand, question No. 2 is whether the amount of Rs. 1,75,810 and Rs. 19,675, being loans advanced to the assessee by M/s. JMDS Pvt. Ltd. and M/s. UMDS Pvt. Ltd., were liable to be assessed in the hands of the assessee as dividends under s. 2(6A)(e) of the Indian I.T. Act, 1922. It was argued before the Tribunal that the said sum did not attract the provisions of s. 2(6A)(c), but it was not argued that the loan was not to the registered shareholder but to the HUF. After giving due consideration to the rival contentions of the parties, we consider that the argument that the loan by the companies was not advanced to a registered shareholder as they were advanced to the HUF, is only one aspect of the question of the applicability of s. 2(6A)(e) of the Act of 1922. The argument which is being a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidend' must be held liable to be taxed in the assessment of the beneficial owner. This court did not decide the question whether a loan advanced to a beneficial owner of the shares can be regarded as 'deemed dividend' within the meaning of s. 2(6A)(e) and the answer given by this court in favour of the revenue cannot be said to extend to this aspect of the question." In the same case, it was also observed (p. 8): " It is only the person whose name is entered in the register of shareholders of the company as the holder of the shares who can be said to be a shareholder qua the company, and not the person beneficially entitled to the shares. It is the former who is a 'shareholder' within the matrix and scheme of the company law and not the latter. We are, therefore, of the view that it is only where a loan is advanced by the company to registered shareholder and the other conditions set out in s. 2(6A)(e) are satisfied that the amount of the loan would be liable to be regarded as 'deemed dividend' within the meaning of s. 2(6A)(e). The amount of the loan would not fall within the mischief of this section if it is granted to beneficial owner of the shares who is not the registered ..... X X X X Extracts X X X X X X X X Extracts X X X X
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