HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Navnitlal C. Javeri v. K. K. Sen, Appellate Assistant Commissioner of Income-tax, D Range, Bombay
Civil Appeal No. 45 of 1964
[1965] 1 SCR 909 ·
Constitution of India: Article 19 and Seventh Schedule List I Entry 82 · Indian Income-tax Act, 1922: sections 2(6A)(e) and 12(1B)
Holding and result. By majority, Parliament could adopt the anti-avoidance fiction within Entry 82, and the provision did not impose the asserted unreasonable restriction. The appeal failed; Raghubar Dayal J dissented.
Sources & disclosures includedDownload original judgment / order
Five-judge Constitution Bench; majority judgment by P. B. Gajendragadkar, C.J.; dissent by Raghubar Dayal, J. · P. B. Gajendragadkar, C.J. · K. N. Wanchoo, J. · M. Hidayatullah, J. · Raghubar Dayal, J. · J. R. Mudholkar, J.
Assessment years: 1956-57
01 · Facts of the case
A shareholder holding 11 of 845 shares borrowed more than Rs.4 lakh from a private electricity company. The assessment included Rs.2,83,126 of accumulated profits as deemed dividend. He challenged Parliament’s competence and the reasonableness of the statutory fiction.
02 · Discussion by the Hon’ble Court
The majority read “income” in Entry 82 broadly and treated the closely held company loan rule as a permissible anti-avoidance device limited by accumulated profits and statutory conditions. It also considered a binding Board circular protecting genuinely repaid earlier loans. The dissent regarded taxing more than the borrower’s proportionate share as lacking rational connection and unreasonably affecting property rights.
Source: Primary judgment: reasoning
03 · Judicial decision
Sections 2(6A)(e) and 12(1B), as applied, were upheld by the majority against legislative-competence and Article 19 challenges.
Source: Primary judgment: holdings
04 · Outcome / in whose favour
Assessee appeal dismissed by majority; Raghubar Dayal J would have allowed it.
05 · AKHB REVIEW POINT
AKHB analysis: apply the deemed-dividend rule only after proving each statutory condition and the relevant accumulated-profit limit. Preserve the majority/dissent distinction and separately verify later statutory wording.
Source & verification
Download original judgment / order · Open cited source rendition
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Statutory scope
Historical statutory provisions are described as they appeared in the report. Verify the current enactment, amendments and later judicial treatment before reliance.
Later treatment
Source checked 2026-10-12. No comprehensive later-treatment or present-law clearance is represented. The note reports the historical statutory text and result in this primary report only.
Page references identify the supplied PDF; paragraph references identify the judgment unless stated otherwise.
AI disclosure & professional disclaimer
This AKHB research note was prepared with AI assistance from the identified primary report and has not been represented as independently human-reviewed.
General legal and tax research only; not legal or tax advice. Verify the complete judgment, governing statutory version and subsequent judicial treatment before reliance. The AKHB REVIEW POINT is editorial analysis, not the Court's holding, and no current-law clearance is claimed.