L. ALAGUSUNDARAM CHETTIAR VS COMMISSIONER Off' INCOME TAX
2002 P T D 1078
[252 I T R 893]
[Supreme Court of India]
Present: B. P. Jeevan Reddy and K. S. Paripoornan, JJ
L. ALAGUSUNDARAM CHETTIAR
Versus
COMMISSIONER Off' INCOME-TAX
Civil Appeals Nos. 477 and 478 of 1979, decided on /01/.
th
October, 1996. (Appeals from the judgment and order, dated October 6, 1976. of the Madras High Court in T.C. Nos. 418 of 1971 and 221 of 1974).
Income-tax---
----Dividend---Company advancing large amounts to low paid employee---Employee advancing loans to assessee, Managing Director-- --Advance to employee for benefit of assessee---Loans to assessee giver by employee can be treated as dividend---"Payment", meaning of---Indian Income-tax Act, 1922, S.2(6A j(e).
The assessee was the Managing Director of a company, K. an employee of the company on a low salary, obtained loans of large amounts from the company and the amounts so obtained were given in turn by K to the assessee as loans. The assessee admitted that whenever he needed money he asked, K and K obtained loans from the company and advanced the money to him as loans. The High Court held that "payment" in section 2(6A)(e) of the Indian Income-tax Act, 1922, meant the act of paying and was neither expressly nor by implication restricted to payment towards pre-existing liability or by way of discharge of an existing obligation or by way of payment by way of hire or wages to which the payee was already entitled. Since all the materials were on record, without remanding the matter to the Appellate Tribunal, the High Court also held that the loans advanced by the company to K were for the benefit of the assessee and could be assessed as dividends in the hands of the assessee (see (1977) 109 ITR 508). The assessee preferred appeals to the Supreme Court. The Supreme Court dismissed the appeals holding that there were no grounds to interfere with the opinion given by the High Court on the basis of the material on record, including the admission of the assessee himself.
CIT v. L. Alagusundaram Chettiar (1977) 109 ITR 508 affirmed.
Mrs. Janaki Ramachandran, Advocate for Appellant.
B.S. Ahuja and S.N. Terdol for Respondent.
ORDER
Heard counsel for the parties. We see no ground to interfere with the opinion given by the High Court based upon the material on record including in particular the admissions of the assessee himself. The appeals are dismissed. No costs.
M.B.A./1068/FCAppeals dismissed.