Deemed dividend provisions apply only to advances made to shareholders, not to Hindu undivided families without shareholder status.

Advances made to Hindu undivided families were not taxable as deemed income under section 2(6A)(e) of the Indian Income-tax Act, 1922 because the provision applied only where the loan or advance was made to a shareholder. Although the shareholders were the respective kartas of the Hindu undivided families, the families themselves were not shareholders, so the statutory condition for deemed dividend treatment was not met. The question of accumulated profits became academic once shareholder status failed, and the amounts could not be brought to tax under the provision.

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Issues: Whether advances made to Hindu undivided families could be taxed as deemed income under section 2(6A)(e) of the Indian Income-tax Act, 1922.

Analysis: The provision applies only where the loan or advance is made to a shareholder. The shareholders in the present case were the respective kartas of the Hindu undivided families, but the Hindu undivided families themselves were not shareholders. On that basis, the statutory condition for bringing the amount to tax under the deemed dividend provision was not satisfied. The question relating to accumulated profits was not answered because it became academic in view of the finding on shareholder status.

Conclusion: The amounts could not be brought to tax under section 2(6A)(e), and the answer was against the Revenue.

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