JUDGMENT judgment of court was delivered by R. Sudhakar J.-Aggrieved by order of Tribunal in dismissing appeal filed by him, appellant-assessee is before this court by filing present appeal raising following questions of law: "(1) Whether, in facts and in circumstances of case, Tribunal was right in differentiating two accounts of appellant in books of M/s. Kapoor Imaging P. Ltd. ignoring fact that they relate to one and same individual? (2) Whether, in facts and in circumstances of case, Tribunal was right in considering only the'Sunil Kapoor' account leaving aside the'Sunil Kapoor loan' account for purpose of ascertaining deemed income during relevant period? (3) Whether, in facts and in circumstances of case, Tribunal was right in not taking into consideration opening balance of Rs. 42,55,699 in'Sunil Kapoor loan' account as starting point of transactions carried during year? (4) Whether, in facts and in circumstances of case, Tribunal was right in not considering both accounts of appellant which were maintained only separately for purpose of convenience in books of M/s. Kapoor Imaging P. Ltd. for purpose of determining deemed dividend? (5) Whether, in facts and in circumstances of case, Tribunal was right in not considering fact that interest paid to appellant was on outstanding balance taking into consideration both ledgers (Sunil Kapoor and Sunil Kapoor loan) in books of Kapoor Imaging Ltd. and not on Sunil Kapoor loan account alone? (6) Whether, in facts and in circumstances of case, Tribunal was right in not considering fact that salary of Rs. 1,50,000 per month received by appellant from company should be deemed to have been received every month though ledger shows only two entries Rs. 6,00,000 on July 31, 2008, and Rs. 12,00,000 on March 31, 2009?" facts, in nut-shell, are as hereunder: appellant-assessee, in his return of income for assessment year 2009-10, on August 12, 2010, declared income of Rs. 24,33,877, which was processed under section 143(1) of Income-tax Act. case was selected for scrutiny and notice under section 143(2) of Income-tax Act was issued on assessee on August 25, 2010. assessee responded to said notice and appeared before Assessing Officer. In course of scrutiny proceedings, assessee was asked to file financial statement of M/s. Kapoor Imaging Pvt. Ltd. (for short "KIPL") for assessment year 2009- 10. On perusal of same, Assessing Officer came to hold that assessee had taken loans and advances on various dates from company in total sum of Rs. 76,86,829. Assessing Officer also noticed that there were certain payments as on March 31, 2009, and balance due to company was Rs. 39,32,345. It is also recorded by Assessing Officer that assessee is having more than 60 per cent. of shares in KIPL. Therefore, Assessing Officer was of view that provisions of section 2(22)(e) of Income-tax Act stood attracted in respect of loans and advances taken by present appellant-assessee from KIPL. stand of assessee is that in books of account of company, there was credit balance in favour of appellant-assessee in sum of Rs. 45,44,303, while there is debit balance of Rs. 39,32,345. It is further stand of assessee that if payments made by appellant-assessee to KIPL is given credit to and after taking note of credit balance of Rs. 45,44,303 and debit balance of Rs. 39,32,345, company itself has to pay Rs. 6,11,957. ledger extract and adjustment as pleaded by assessee, which are found in paragraph 2 of assessment order, are extracted hereinbelow for better clarity: (Rs.) Payment to University of Portsssmouth : 10,53,612.00 towards Varun s fees DLF Sathyam Home Pvt. Ltd. : 20,00,000.00 Amount paid to Sharan fees : 12,850.00 Insurance premium paid : 26,19,670.00 Amount paid to Akshaya Homes : 10,20,000.00 Salary paid : 1,20,000.00 US Dollar purchased for Varun : 10,998.00 TDS paid : 5,81,435.00 HDFC Bank New A/c : 20,000.00 Amt. paid to Punjab Association : 60,000.00 Amt. paid to Johnson s lift AMC : 38,764.00 Advance tax paid : 1,00,000.00 Amount paid to Annees Alikhan : 25,000.00 Cash paid : 3,000.00 EB Board changed : 21,500.00 Total : 76,86,829.00 Assessing Officer, taking note of fact that loan outstanding in books of account of company in favour of appellant as on March 31, 2009, is Rs. 45,44,303, held that amount of Rs. 76,86,829 received by assessee from KIPL has not been repaid as on that date and, therefore, all payments made by KIPL to assessee up to March 31, 2009, by way of loans and advances should be treated as deemed dividend in terms of section 2(22)(e) of Income-tax Act because conditions required to hold transaction as "deemed dividend" have been satisfied. Assessing Officer held that four basic requirements for construing transaction as "deemed dividend" are fulfilled in present case. For better clarity, said portion of order is extracted hereinbelow: (i) shareholder, who is beneficial owner of shares with not less than 10 per cent. voting power. (ii) Any concern in which such shareholder is member or partner, having beneficial entitlement of not less than 20 per cent. of such concern's income. (iii) Any payment on behalf, or for individual benefit of such shareholder. (iv) company has surplus reserve of Rs. 10,26,62,126 for year ending March 31, 2009. Assessing Officer also held that in books of account, assessee has shown two separate accounts, one for loan taken from company, viz., KIPL and one for loan given. Accordingly, Assessing Officer held that irrespective of amount paid by assessee to KIPL, entire amount received by assessee from KIPL under head loans and advances amounting to Rs. 76,86,829 is to be treated as "deemed dividend" under section 2(22)(e) of Act. Aggrieved by said order of Assessing Officer, assessee preferred appeal before Commissioner of Income-tax (Appeals), who, taking note of entire transaction, came to hold as follows: "5.1 In present case, there is no dispute regarding fact that appellant was holding more than 60 per cent. of shares in KIPL in which public are not substantially interested. It is seen from details submitted by learned authorised representative that KIPL had maintained two separate accounts, i.e., (i)'Sunil Kapoor loan' account and (ii)'Sunil Kapoor' account. two accounts are separate and distinct which is clear from fact that interest of Rs. 2,12,782 has been paid to'Sunil Kapoor loan' account on which TDS of Rs. 24,108 has also been deducted/paid. Hence, appellant cannot take plea that both accounts should be considered together and opening balance of Rs. 42,55,629 in the'Sunil Kapoor loan' account should be starting point of transactions carried on during year. Credit of Rs. 42,55,629 cannot be given while considering issue of deemed dividend under section 2(22)(e) since it pertained to distinct and separate account. Hence, only individual account, i.e.,'Sunil Kapoor' account has to be considered for determining and quantifying deemed dividend under section 2(22)(e). 5.2 Assessing Officer has considered all payments made by KIPL on behalf of appellant amounting to Rs. 76,86,829 as deemed dividend ignoring payment made by assessee to KIPL or received by KIPL on behalf of assessee. In my view, such interpretation is not proper. Only that amount of loan and advances, which is actually received by assessee shareholder from company during relevant assessment year would fall within inclusive sub-clause (e) of definition of'dividend' appearing in section 2(22)(e). hon'ble Bombay High Court in case of CIT v. P. K. Badiani [1970] 76 ITR 369 (Bom) has held that in case of mutual, open and current account which shareholder has with company, every debit, i.e., every payment by company to shareholder may not be loan. To be treated as loan, every amount paid must make company creditor of shareholder for that amount. If, however, at time when payment is made, company is already debtor of shareholder, payment would be merely repayment by company towards its existing debt. It would be loan by company only if payment exceeds amount of its already existing debt and that too only to extent of excess. Therefore, position as regards each debit will have to be individually considered, because it may or may not be loan. Assessing Officer is, therefore, directed to verify each debit entry on aforesaid line and treat only excess amount as deemed dividend under section 2(22)(e) of Act. ground is partly allowed for statistical purpose." According to Commissioner of Income-tax (Appeals), provisions of section 2(22)(e) of Act stand attracted. However, in calculating dividend amount, Assessing Officer had erred in not taking into consideration amount that has been repaid by assessee to KIPL. Therefore, Assessing Officer was directed to verify each and every transaction and, accordingly, was directed to redetermine dividend amount. Against said order, assessee pursued matter before Tribunal and in light of finding of Commissioner of Income-tax (Appeals) in paragraph 5.1 and 5.2, which have already been extracted above, Tribunal came to hold that on reading of section 2(22)(e) of Act, reasoning given by Commissioner of Income-tax (Appeals) is wholly justified and there is no reason to interfere with said order. Aggrieved by said order of Tribunal, assessee has preferred present appeal. contention of learned counsel for appellant-assessee is that two transactions, one is advance by assessee to company in sum of Rs. 45,44,303 and other is receipt of Rs. 76,86,829, should be taken as one component as it emanates from one and same person and, therefore, reconciliation should be done on that basis and not separately as done by Assessing Officer and confirmed by appellate authorities. said exercise, as done by authorities below, is bad in law and, therefore, order of Tribunal deserves to be set aside and appeal has to be allowed. Heard learned counsel appearing for appellant and learned standing counsel appearing for respondent and perused materials available on record. issue that requires determination in this case is whether Tribunal was justified in holding that transaction in present case would fall under definition of "deemed dividend" under section 2(22)(e) of Income-tax Act. On perusal of documents available on record, it is to be pointed out here that contention of learned counsel for appellant that two transactions are done by single entity, viz., appellant-assessee and, therefore, same has to be treated as single transaction, is per se, not correct. said issue has been dealt with more clarity by Commissioner of Income-tax (Appeals), where it has been clearly held that there are two separate accounts, one as Sunil Kapoor loan account, which is in sum of Rs. 45,44,303 for which interest of Rs. 2,12,783 has been paid and TDS of Rs. 24,108 has been deducted and paid over to Department and other account is running account, which has been reconciled as on March 31, 2009, at sum of Rs. 76,86,829 and after giving credit to various amounts, balance due was determined as Rs. 39,32,345. This finding of Commissioner of Income-tax (Appeals) was upheld by Tribunal stating that two accounts are distinct and separate, which, this court is of considered opinion, on facts of present case, appears to be correct and justified, warranting no interference. However, at present time, larger issue before this court is with regard to interpretation of section 2(22)(e) of Act on which much reliance has been placed by Department to hold that amount pending in books of account of KIPL under head loans and advances to assessee is to be construed as "deemed dividend". For better clarity, section 2(22)(e) of Income-tax Act is extracted hereinbelow: "2. Definitions.-... (22)'dividend' includes-... (e) any payment by company, not being company in which public are substantially interested, of any sum (whether as representing part of assets of company or otherwise) made after 31st day of May, 1987, by way of advance or loan to shareholder, being person who is beneficial owner of shares (not being shares entitled to fixed rate of dividend whether with or without right to participate in profits) holding not less than ten per cent. of voting power, or to any concern in which such shareholder is member or partner and in which he has substantial interest (hereafter in this clause referred to as said concern) or any payment by any such company on behalf, or for individual benefit, of any such shareholder, to extent to which company in either case possesses accumulated profits." Before deciding issue as raised in case on hand, it would be useful to look at law on this subject, as dealt with by various courts and Supreme Court. Supreme Court in case of Navnit Lal C. Javeri v. K. K. Sen, AAC of I. T. [1965] 56 ITR 198 (SC), while upholding constitutional validity of section 2(6A)(e) of Income-tax Act, as it stood then, which is in pari materia with present section 2(22)(e) of Act observed that if Legislature realises that private controlled companies generally adopt device of making advances or giving loans to their shareholders with object of evading payment of tax, it can step in to meet this mischief and create fiction by which amount ostensibly and nominally advanced to shareholder as loan is treated in reality for tax purposes as payment of dividend to him, such fiction created cannot be said to be beyond scope of legislative competence. relevant portion of order is quoted hereinbelow for better clarity (page 207): "The companies to which impugned section applies are companies in which at least 75 per cent. of voting power lies in hands of persons other than public, and that means that companies are controlled by group of persons allied together and having same interest. In case of such companies, controlling group can do what it likes with management of company, its affairs and its profits within limits of Companies Act. It is for this group to determine whether profits made by company should be distributed as dividends or not. declaration of dividend is entirely within discretion of this group. When Legislature realised that though money was reasonably available with company in form of profits, those in charge of company deliberately refused to distribute it as dividends to shareholders, but adopted device of advancing said accumulated profits by way of loan or advance to one of its shareholders, it was plain that object of such loan or advance was to evade payment of tax on accumulated profits under section 23A. It will be remembered that advance or loan which falls within mischief of impugned section is advance or loan made by company which does not normally deal in money-lending, and it is made with full knowledge of provisions contained in impugned section. object of keeping accumulated profits without distributing them obviously is to take benefit of lower rate of super-tax prescribed for companies. This object was defeated by section 23A which provides that in companies. This object was defeated by section 23A which provides that in case of undistributed profits, tax would be levied on shareholders on basis that accumulated profits will be deemed to have been distributed amongst them. Similarly, section 12(1B) provides that if controlled company adopts device of making loan or advance to one of its shareholders, such shareholders will be deemed to have received said amount out of accumulated profits and would be liable to pay tax on basis that he has received said loan by way of dividend. It is clear that when such device is adopted by controlled company, controlling group consisting of shareholders have deliberately decided to adopt device of making loan or advance. Such arrangement is intended to evade application of section 23A. loan may carry interest and said interest may be received by company; but main object underlying loan is to avoid payment of tax. It may ultimately be repaid to company and when it is so repaid, it may or may not be treated as part of accumulated profits. It is this kind of well-planned device which section 12(1B) intends to reach for purpose of taxation. It appears that such device is adopted by private companies in many countries. Simon has referred to this device in these words: 'Generally speaking, surtax is charged only on individuals, not on companies or other bodies corporate. Various devices have been adopted from time to time to enable individual to avoid surtax on his real total income or on portion of it, and one method involved formation of what is popularly called "one-man company". individual transferred his assets, in exchange for shares, to limited company, specially registered for purpose, which thereafter received income from assets concerned. individual's total income for tax purposes was then limited to amount of dividends distributed to him as practically only shareholder, which distribution was in his own control. balance of income, which was not so distributed, remained with company to form, in effect, fund of savings accumulated from income which had not immediately attracted surtax. Should individual wish to avail himself of use of any part of these savings he could effect this by borrowing from company, any interest payable by him going to swell savings fund; and at any time individual could acquire whole balance of fund in character of capital by putting company into liquidation'. What Simon says about one-man company can be equally true about controlled company whose affairs are controlled by group of persons closely knit and having same interest." Following view of Supreme Court in Navnit Lal C. Javeri's case (supra), Calcutta High Court, in case of Tarulata Shyam v. CIT [1971] 82 ITR 485 (Cal), held that tax is attracted at point when loan is borrowed by member/shareholder. For better clarity, relevant portion of order is quoted hereunder (page 494): "It is clear from above cited passage that if controlled company adopted device of making loan or advance to one of its shareholders such shareholder would be deemed to have received said amount out of accumulated profits and would be liable to pay tax on basis that he had received said loan by way of dividend. Whether loan is ultimately repaid to company or not is immaterial. This decision would seem to answer all contentions raised by Mr. Choudhury against assessment of amount as dividend. Further, as pointed out by both Accountant Member and President of Income-tax Appellate Tribunal, neither Bombay High Court nor Madras High Court, who had also occasion to consider this question, had any doubts that liability to tax attached as soon as loan was taken from company. For instance, in Madras case of K. M. S. Lakshmana Aiyar v. Addl. ITO [1960] 40 ITR 469 (Mad), it was observed that under section 2(6A)(e) loan or advance by controlled company to its shareholder would attract tax liability though such loan might be repaid subsequently even during that year. Again, Bombay High Court in Navnit Lal C. Javeri v. K. K. Sen, from which aforesaid appeal was taken to Supreme Court, has observed as follows:'The tax is attracted at point of time when said loan is borrowed by members'. We have, therefore, no hesitation in holding that liability to be taxed attaches to any amount taken as loan by shareholder from company at moment loan is borrowed and it is immaterial whether loan is repaid before end of accounting year or not. answer to question referred must, therefore, be in affirmative and in favour of Department." Supreme Court in case of Smt. Tarulata Shyam v. CIT [1977] 108 ITR 345 (SC), which appeal is product of above referred to decision from Calcutta High Court, has culled out situation in which payments made to shareholder are to be treated as taxable dividend, wherein five conditions have been laid down for purpose of determination of head on which amount is to be taxed. For better clarity, said portion of order is extracted hereinbelow (page 355): "From above discussion, it emerges clear that fiction created by section 2(6A)(e) read with section 12(1B) of Act is inexorably attracted as soon as all conditions necessary for its application exist in case. In Navnit Lal's case [1965] 56 ITR 198, 202 (SC) this court, after analysis of these provisions, listed these conditions, as follows: '... combined effect of these two provisions is that three kinds of payments made to shareholder of company to which said provisions apply, are treated as taxable dividend to extent of accumulated profits held by company. There three kinds of payments are: (1) payments made to shareholder by way of advance or loan; (2) payments made on his behalf; and (3) payments made for his individual benefit. There are five conditions which must be satisfied before section 12(1B) can be invoked against shareholder. first condition is that company in question must be one in which public are not substantially interested within meaning of section 23A as it stood in year in which loan was advanced. second condition is that borrower must be shareholder at date when loan was advanced; it is immaterial what extent of his shareholding is. third condition is that loan advanced to shareholder by such company can be deemed to be dividend only to extent to which it is shown that company possessed accumulated profit at date of loan. This is important limit prescribed by relevant section. fourth condition is that loan must not have been advanced by company in ordinary course of its business. In other words, this provision would not apply to cases where company which advances loan to its shareholder carries on business of money lending itself; and last condition is that loan must have remained outstanding at commencement of shareholder's previous year in relation to assessment year 1955-56.' (emphasis supplied). first four conditions factually exist in instant case. last condition is not applicable because it was transitory provision applicable to assessment year 1955-56 only, while we are concerned with assessment year 1957-58, and previous year is calendar year 1956." Keeping above guidelines, as postulated by Supreme Court in mind, cursory look into facts of present case would disclose that there is no dispute that company is controlled (private limited) company in which public are not substantially interested. Further, assessee is admittedly shareholder and director of KIPL. It is also beyond controversy that at all material times, company possessed "accumulated profits" in excess of amount which assessee-shareholder was paid during previous year. Income-tax Officer found that surplus reserve of company for year ending March 31, 2009, stood at Rs. 10,26,62,126. assessee drew money for purpose of making payments, which were personal in nature, aggregating Rs. 76,86,829, which amount was shown as loan or advance in books of account of KIPL. company's business is not money-lending and it could not be said that loans had been advanced by company in ordinary course of its business. In such circumstances, in instant case, all amounts advanced to assessee-appellant under head loans and advances fall squarely within ambit of section 2(22)(e) of Income-tax Act. object of Legislature in enacting section 2(22)(e) is to prevent escapement of tax by some shareholders. Under section 2(22)(e) of Act by deeming provision, Legislature has made payment of any advance or loan to shareholder deemed dividend so as to subject such payments to levy of tax in hands of receiver of said amount. It should be noted that in pari materia provision, viz., clause (e) of section 2(6A) of Act was substituted for original provision by Finance Act, 1955, with effect from April 1, 1955. object of provision is to prevent avoidance of tax by shareholders of closely-held company. In such company, few shareholders, who effectively control it, can easily exploit its juristic personality, by restraining it from distributing its yearly dividends and thereby accumulating its profits, and thus saving themselves from higher tax incidence resulting from distribution of dividend. In such backdrop, above provision came to be inserted so as to make any payment made by company by way of advances and loans to shareholders, who satisfy certain conditions, as enumerated above, to fall under head "Dividend" as defined under section 2(22)(e) of Income-tax Act. In case on hand, assessee-appellant having received above amount from KIPL under head loans and advances as shown in books of account of KIPL, five ingredients, as propounded by Supreme Court in Tarulata Shyam's case (supra) to bring said amount under ambit of dividend are wholly satisfied in present case and four parameters, as enumerated by Assessing Officer, are also squarely attracted to case of assessee herein. Therefore, any amount paid to assessee by company during relevant year, less amount repaid by assessee in same year, should be deemed to be construed as "dividend" for all purposes. However, in case on hand, Assessing Officer has taken entire amount of Rs. 76,86,829 received by assessee from company as dividend, while computing income, but has lost sight of payment made. In such circumstances, this court is of considered opinion that Commissioner of Income-tax (Appeals) has rightly come to conclusion that "the position as regards each debit will have to be individually considered because it may or may not be loan. Assessing Officer is, therefore, directed to verify each debit entry on aforesaid line and treat only excess amount as deemed dividend under section 2(22)(e) of Act". We find such direction issued by Commissioner of Income-tax (Appeals), as upheld by Tribunal is in consonance with provision of section 2(22)(e) of Act and only those amounts, which reflect in debit side of books of account of company falling under definition of loans and advances, with regard to shareholder, in relevant year will be entitled to be taken as deemed dividend. For foregoing reasons, it is ordered as follows: "(i) On question of law raised, we are of view that Tribunal was justified in dismissing appeal filed by assesseeappellant and, consequently, order of Tribunal dated June 25, 2013, stands confirmed. (ii) Consequently, issue as framed by this court is answered in favour of Revenue and against assessee." In result, this appeal is dismissed. However, in circumstances of case, there shall be no order as to costs. *** Sunil Kapoor v. Commissioner of Income-tax