(1.) A substantial shareholder in a closely held company is the assessee-respondent in both the income-tax reference cases. The other shareholders in the company are the assessee's wife and father. Seventy-five per cent, of the shares in the company are held by the asses-see.
(2.) INCOME-tax Reference No. 267 of 1986 relates to the assessment year 1976-77 for which the previous year ended on August 16, 1975, and INCOME-tax Reference No. 428 of 1985 relates to the assessment year 1975-76 for which the previous year ended on August 16, 1974. During the previous year relevant to the assessment year under consideration in INCOME-tax Reference No. 267 of 1985, the company gifted to Sri P. J. Ranjit, son of the assessee, a sum of Rs. 1 lakh and during the relevant previous year under consideration in INCOME-tax Reference No. 428 of 1985, the company made a gift of Rs, 34,000 to P. J. George, Rs. 33,000 to p. J. Eappen and Rs. 33,000 to P. J. Ranjit, the three sons of the assessee. Two of the sons of the assessee were minors during the relevant previous year. The INCOME-tax Officer, while completing the assessment of the assessee, treated these amounts as payments made on behalf of, or for the benefit of, the assesses and, therefore, considered them, under Section 2(22)(e) of the INCOME-tax Act, 1961, as deemed dividend in the hands of the assessee.
(3.) FOR the assessment year 1976-77 (relating to Income-tax Reference No. 267 of 1985).