Revenue has raised following ground in this appeal: "On facts and in circumstances of case, AAC has erred in deleting addition of Rs. 40,000 correctly made by ITO as deemed dividend receive by assessee from Punjab National Bank." In accounting year ending on 31st March, 1974 relevant to asst. yr. 1974-75, assessee had surrendered 1000 shares of Punjab National Bank for total consideration of Rs. 40,000. said shares had been bought for sum of Rs. 20,750 and on this basis short term capital gain of Rs. 7,358 had been admitted before ITO. In course of assessment proceeding, ITO indicated to assessee that entire amount of Rs. 40,000 would be assessable as deemed dividend income under provisions of s. 2 (22)(d) of IT Act, 1961. assessee submitted in reply dt. 30th Sept., 1976 that it should have no objection to assessment of amount as deemed dividend but on condition that Rs. 6,900 be allowed as tax deduction at source. ITO only partly accepted offer made by assessee in its letter dt. 30th Sept., 1976. He assessed sum of Rs. 40,000 as deemed dividend income but did not grant any benefit of tax deduction at source. Dissatisfied with order passed by ITO matter was taken in appeal before AAC. latter held following decision of ITAT Delhi Bench-C in case of Mr. Justice T. P. S. Chawla (ITA No. 1695/Del/ 77-78 decided on 27th Feb., 1982) that sum of Rs. 40,000 was not assessable as deemed dividend income and that assessee be subjected to tax on short-term capital gains as admitted by it before ITO. It is in above mentioned facts that Department is in appeal. Shri S. K. Bansal ld. Departmental Representative submits that sum of Rs. 40,000 was assessable under provisions of s. 2(22)(d) as deemed dividend and that AAC had no justification in upsetting that finding. On other hand, Shri S. R. Khurana, ld. authorised counsel of assessee respondent has supported t h e order of AAC and taken us through paper book which includes Photostat copy of order of ITAT. In case of Mr. Justice T. P. S. Chawla. After considering rival submissions and decision of ITAT No. 1695 and after looking into provisions of s. 2 (22)(d), it does appear to us that sum of Rs. 40,000 was not assessable as deemed dividend income of assessee respondent in asst. yr. 1974-75. In case of Mr. Justice T. P. S. Chawla which was also relating to asst. yr. 1974-75, Tribunal had found that provisions of s. 2 (22)(d) were not satisfied and that Punjab National Bank did not have any accumulated profits as on 30th Jan., 1974. facts in case of Mr. Justice T. P. S. Chawla and facts in present case being absolutely similar we would hold that assessee was only liable to be taxed in respect of capital gains on surrender of its 1000 shares for consideration of Rs. 40,000. ITO will be justified to assess assessee in respect of short-term capital gains but there was no justification on his part to have subjected as sum of Rs. 40,000 as deemed dividend income. Subject to observations as above appeal filed by Revenue is rejected. *** INCOME TAX OFFICER v. SMT. SOHAN DEVI