Deemed dividend under income tax law covers the full loan or advance, limited only by accumulated profits, not shareholding fraction.

Section 2(6A)(e) of the Indian Income-tax Act, 1922 treats any advance or loan by a closely held company to a shareholder, or for the shareholder's benefit, as dividend, limited only by the company's accumulated profits. The provision refers to "any payment" and does not support limiting dividend treatment to a proportionate fraction based on shareholding. Read with the anti-evasion purpose of the clause and the structure of section 2(6A), the whole loan or advance is deemed dividend to the extent of accumulated profits, not merely 1/300th or any other shareholding-based fraction.

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Issues: Whether, on the facts and in the circumstances of the case, only 1/300th of the accumulated profits of the company could be treated as dividend under section 2(6A)(e) of the Indian Income-tax Act, 1922, or whether the whole amount advanced or loaned to the assessee was liable to be taxed as dividend to the extent of the accumulated profits.

Analysis: Section 2(6A)(e) brings within the definition of dividend any payment by a closely held company by way of advance or loan to a shareholder, or payment on his behalf or for his individual benefit, subject only to the limit of the company's accumulated profits. The provision speaks of "any payment" and contains no indication that only a proportionate share corresponding to the shareholder's holding is to be treated as dividend. The comparison with the other clauses of section 2(6A), and the anti-evasion object behind the provision, support the view that the whole of the payment is deemed dividend, limited only by the quantum of accumulated profits.

Conclusion: The whole amount of the loan or advance, to the extent of the accumulated profits, was taxable as dividend in the hands of the assessee, and the contention that only a proportionate fraction based on shareholding was taxable was rejected.

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