K.S. Hegde, J. - (1.) This is an appeal by special leave from a decision of the Andhra Pradesh High Court. The question of law referred to the High Court under Section 66(1) of the Income-tax Act, 1922, (to be hereinafter referred to as "the Act") is "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 -
(2.) The assessee in this case is a Hindu undivided family. From the case stated it is not possible to state definitely as to how many coparceners were there in that family. But we gather from the case stated that the three of the members of that family, viz. Doraiswamy, Singaram and Sarathy were shareholders in a private limited company by name "The Chittoor Motor Transport; Co. (Private) Ltd." Doraiswamy and Singaram held 100 shares each in that company; Sarathy held 2,797 shares. The Tribunal found that these shares were acquired from out of the family funds. It appears that in the account years relevant to the assessment years 1955-56 and 1956-57 the Chittor Motor Transport Co. (Private) Ltd. advanced certain loans to the Hindu undivided family of which Doraiswamy, Singaram and Sarathy was coparceners The question arose whether those loans can be considered as "dividend" within the meaning of that expression in Section 2(6A) (e) of the Act. The Tribunal found as a fact that the loan in question had been granted to the H.U.F. The assessee contended that the same was taken for making an advance to the Vegetols Ltd. The Tribunal did not examine the correctness of that contention. it was contended on behalf of the Revenue before the Tribunal that the loan in question was advanced to the shareholders of the company. The Tribunal repelled that contention. It came to the conclusion that though the shares were acquired from out of the family funds in law the shareholders were Doraiswamy, Singaram and Sarathy and not their H.U.F. Hence, the loan. advanced to the H.U.F. cannot be considered as loans advanced to the "shareholders" within the meaning of Section 2(6A)(e).
(3.) Before the High Court the counsel for the Revenue gave up the contention that the loans in question were advanced to the "shareholders" of the company. On the other hand, he contended that those loans had been advanced on behalf of or for the individual benefit of the shareholders. The High Court did not accept that contention. It held that as no such case had been taken up before the Tribunal it was not possible to go into that contention. The facts found by the Tribunal did not afford any basis for that contention. In the result, the High Court answered the question referred to it in favour of the assessee.;