TMI Blog1983 (1) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Commissioner (Appeals). The department has, therefore, come up in appeal. 2. The only ground taken in the appeal is that the Commissioner (Appeals) erred in holding that the amount cannot be considered as deemed dividend. 3. The assessee is a shareholder in Zenith Tin works (P.) Ltd. (hereinafter referred to as 'the company'). During the relevant accounting period, the assessee had drawn substantial amounts from the company and the debit came to Rs. 1,88,242. This was the amount which was treated as deemed dividend by the ITO under section 2(22)(e). 4. Almost all the shares of the company are held by the assessee, his two brothers and their families. There were some gifts of the shares. The three brothers gifted shares to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dend and brought the same to tax in the hands of the assessee. 7. Before the Commissioner (Appeals), the assessee questioned the validity of the reopening of the assessment and also questioned the correctness of the assessment on merits. The Commissioner (Appeals) did not adjudicate upon the validity of the reopening but on merits he held that the amount cannot be brought to tax. He was of the view that the assessee cannot be held to be the beneficial owner of the shares standing in the name of the minor sons as the benefit of such ownership does not accrue to him, and that the assessee does not, therefore, control 20 per cent of the voting power. He, therefore, deleted the addition made by the ITO. The department has come up in appeal ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the question mentioned above will still remain even if the shares were gifted by the assessee himself to his minor sons. A father as guardian may manage the affairs with regard to the shares standing in the name of his minor sons, but this will not make him the beneficial owner of the shares. To make him a beneficial owner, the benefit or advantage arising out of the shares must accrue to him. In the present case, the shares belong to the minors and the benefit arising out of the same accrues only to the minors. By managing the shares as the guardian, it cannot be said that the father will become the beneficial owner of the shares. We are in full agreement with the view expressed by the Commissioner (Appeals) that the assessee cannot be s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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