Shah, J. - (1.) The assessee is a Hindu undivided family of which the manager is Sarathy. There are in the family two other adult male members : Doraiswamy and Singharan. Sarathy holds 2,797 shares, Doraiswamy holds 100 shares and Singharan holds 100 shares in a limited company styled "The Chittoor Motor Transport Company (Private) Limited." In this company the public are not substantially interested within the meaning of section 23A of the Income Tax Act, 1922. The shares were acquired with the funds of the Hindu undivided family, and, therefore, were taken to be the property of the Hindu undivided family The dividend earned on these shares was also regarded as the income of the Hindu undivided family and was assessed accordingly. Sarathy was the managing director of the company, and the managing directors remuneration too was treated and assessed as the income of the Hindu undivided family.
(2.) In the assessment years 1955-56 and 1956-57, the Hindu undivided family was sought to be charged to tax in respect of the sums of Rs. 5,790 and Rs. 39,085 advanced as loans on the footing that they represented divided income falling within section 2(6A)(e) of the Income Tax Act in the respective years. The assessee disputed the inclusion on diverse grounds, one of which was that the dividend income could not be assessed as the income of the assessee, "the Hindu undivided family not being the shareholder to whom the payment of advance or loan was made."
(3.) It was held by the Tribunal that the undivided family was not itself and could not be the registered shareholder of the company, and the individual members were the registered shareholders; therefore, the advance of loan to the assessee which was not a registered shareholder, could not be treated as dividend income of the assessee.;