TaxTMI 
TaxTMI 
1967 (3) TMI 41
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....ares while each of his sons, Doraiswami and Singaram, held 100 shares in a limited company called the Chittoor Motor Transport Company Limited. It is common ground that the shares were acquired with the funds of the Hindu undivided family and the dividend earned on these shares was also shown as the income of the undivided family for purposes of assessment. During the assessment years 1955-56, 1956-57, the assessee received by way of advance or loan two sums, namely, Rs. 5,790 and Rs. 40,419 from the said company. The Income-tax Officer, Chittoor, included these two amounts as dividend income in arriving at the taxable income of the assessee. The assessee disputed the said inclusion mainly on two grounds, firstly, that the individual member....
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....t a reference under section 66(1) of the Indian Income-tax Act of 1922, on which the Tribunal referred the following question to the High Court, viz. : "Whether, on the facts and in the circumstances of the case, the amounts of Rs. 5,790 and Rs. 39,085 could be deemed to be the dividend income of the Hindu undivided family in the respective assessment years?" This reference came up for hearing before a Division Bench of this court consisting of Chandra Reddy C. J. and Mohammed Mirza J. Without going into the merits of the case, the learned judges set aside the order of the Tribunal and remanded the appeal to the Appellate Tribunal for consideration of the question whether the payments can be regarded as having been made on behalf of a....
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....ndividual benefit of a shareholder, to the extent to which the company in either case possesses accumulated profits ;. . ." This definition contemplates two kinds of payments which are included in the definition of dividend : (1) a payment made by way of advance or loan to a shareholder ; (2) any payment made on behalf or for the individual benefit of a shareholder. Shri K. Ranganathachari, the learned advocate for the assessee, contended that the amounts in question cannot be brought within the first limb of the section. The learned counsel contends that the assessee undivided family is not the shareholder and that it is only the individual members that are registered as shareholders in the books of the company, that it is only those....
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....oan to a shareholder." The next point for consideration is whether the payment really falls within the second limb of the definition, that is, "whether it is a payment on behalf of or for the individual benefit of the shareholder". From the material placed before us, we find that there is no evidence to show that the payment was made on behalf of or for the benefit of the shareholders. As already pointed out, the contention of the assessee is that the loan was really for the benefit of the Vegetols Ltd., which is an entirely different entity from the assessee-family. Unfortunately, no evidence has been placed before us which leads to the conclusion that the payment was made for the benefit or on behalf of the shareholders. We are not prepar....