Law:

Section:

Section 2(22) , read with section 256 of the Income-tax Act, 1961 [Corresponding to section 2(6A), read with section 66 of the Indian Income-tax Act, 1922] – Deemed dividend – Whether where finding of Tribunal that amounts sought to be brought to tax by way of deemed dividend fell outside relevant accounting year and that for purposes of deemed dividend, different according year could not be taken into consideration, had been accepted by revenue, question as to whether amount could be properly brought to tax as deemed dividend or not did not arise and need not be answered – Held, yes FACTS The assessee held shares in two companies. Though the assessment of the assessee related to the accounting year ending 31-10-1956, the ITO took the accounting year ending 31-3-1957, as the previous year for the purposes of deemed dividends under section 2(6A)(e) of the 1922 Act. The AAC dismissed the assessee's appeal. On further appeal, the Tribunal took the view that the fact that the shareholder was deemed to have received dividend income by operation of law and not by actual distribution by the company did not make any difference about the source from which it was derived, namely, the shares held by the assessee. Thus, the Tribunal found that even for the purposes of deemed dividends the computation should have been made on the basis of the Diwali year and if the Diwali year was adopted, then the entire amount of deemed dividends would have to be left out of consideration. The Tribunal thus allowed the assessee's appeal. On reference : HELD The finding recorded by the Tribunal that the amounts which were sought to be brought to tax by way of deemed dividends fell outside the Diwali year ending 31-10-1956, and that for the purposes of deemed dividends, a different account year could not be taken into consideration, had been accepted by the revenue. Since that finding could not be disturbed, it was not necessary for the purposes of the assessment year in question to go into the other questions. In this view of the matter, in the peculiar facts of this case, the questions which had been referred for the purposes of the assessment year in question a decision thereon was not…

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