Commissioner Of Income-Tax v. H.K Mittal

1. This is an application under section 256(2) of the Income-tax Act, 1961, by the Revenue requiring us to direct the Income-tax Appellate Tribunal to refer the following question to this court for its opinion:

“Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in allowing the relief for Rs. 67,37,712 by holding that the entire exercise of provisions of deemed dividend in the present circumstances of the case is misdirected?”

2. While rejecting the application of the Revenue under section 256(1), the Tribunal clearly observed that “since the basis that the assessee is not a shareholder has not been challenged, which is the primary condition, the claim that advance received should be considered as deemed dividend in his hands in the circumstances cannot be raised”.

3. The chief ingredient of sub-clause (e) to clause (22) of section 2 of the Income-tax Act is that one should be a shareholder on the date the loan was advanced and according to the Tribunal that ingredient having not been established, the advance could not be taken as deemed dividend under section 2(22)(e) of the Act.

4. The abovementioned finding of the Tribunal is, no doubt, a finding of fact and has not been specifically challenged and, therefore, the above-mentioned question is not referable.

5. The application, therefore, fails and is rejected with costs.