Deemed dividend applied where a Hindu undivided family was the registered shareholder and recipient of company advances.

Advances made by a company to a Hindu undivided family were assessable as deemed dividend where the family itself had applied for the shares, was entered in the share register as shareholder, received dividends, and received the advances. On those facts, the family, and not merely its karta, was treated as the shareholder for section 2(6A)(e) of the Indian Income-tax Act, 1922, so the statutory condition for deemed dividend was satisfied and the advances fell within the provision.

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Issues: Whether advances made by a company to a Hindu undivided family, shown in the share register as the shareholder, were assessable as deemed dividend under section 2(6A)(e) of the Indian Income-tax Act, 1922.

Analysis: The finding of the final fact-finding authority was that the Hindu undivided family itself applied for shares, was entered in the company's share register as shareholder, received dividends, and was the recipient of the advances. On those facts, the family, and not merely its karta, was the shareholder for the purpose of the provision. The statutory condition for treating the advances as deemed dividend was therefore satisfied.

Conclusion: The provision applied, and the advances were assessable as deemed dividend.

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