HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Commissioner of Income-tax, Andhra Pradesh v. C. P. Sarathy Mudaliar
Civil Appeals Nos. 2242 and 2243 of 1968
[1972] 1 SCR 1076 ·
Indian Income-tax Act, 1922: sections 2(6A)(e), 16(2), 18(5), 23A and 66(1)
Sources & disclosures includedDownload original judgment / order
2-judge bench; unanimous judgment delivered by K. S. Hegde, J. · K. S. Hegde, J. · H. R. Khanna, J.
Assessment years: 1955-56, 1956-57
01 · Facts of the case
Three HUF members were registered shareholders in a closely held company, while the shares beneficially belonged to the family. Company advances were made to the HUF, and Revenue treated them as deemed dividends (SCR pp.1076-1079; PDF pp.1-4).
Source: Primary judgment: facts
02 · Discussion by the Hon’ble Court
The artificial deeming provision required strict construction. Shareholder meant the registered holder, and an HUF could not be registered, so a loan to the HUF was not a loan to a shareholder. Revenue's alternative individual-benefit theory had not been raised before the Tribunal and lacked findings (SCR pp.1079-1083; PDF pp.4-8).
Source: Primary judgment: discussion
03 · Judicial decision
Both Revenue appeals were dismissed with costs (SCR p.1083; PDF p.8).
Source: Primary judgment: decision
04 · Outcome / in whose favour
In favour of the assessee on the registered-shareholder limb; the alternative benefit limb was not decided on its merits (SCR pp.1079-1083; PDF pp.4-8).
Source: Primary judgment: outcome
05 · AKHB REVIEW POINT
AKHB analysis: identify separately the registered shareholder, beneficial owner, payment recipient, accumulated profits and exact statutory limb. A new benefit theory requires pleaded facts and findings (based on SCR pp.1079-1083; PDF pp.4-8).
Source: Primary judgment: review point
Source & verification
Download original judgment / order · Open cited source rendition
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Statutory scope
The old deemed-dividend text materially differs from later concern and beneficial-interest provisions; no current-law result is represented.
Later treatment
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