V. Ramaswami, J.
1. The following question has been referred at the instance of the revenue :
' Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that there were no accumulated profits of the company as on April 1, 1960 and no amount could be brought to tax under the provisions of Section 2(6A)(e) of the Indian Income-tax Act, 1922 '
2. It is admitted that the loan was given to the HUFs, who are shown as respondents in this tax case. The shareholders were the respective kartas of these HUFs. The Supreme Court in the decision CIT v. C. P. Sarathy Mudaliar : 83ITR170(SC) has held that in such a case, the HUF cannot be treated as a shareholder and the individual alone is the shareholder. Under Section 2(6A)(e) of the Indian I.T. Act, 1922, unless the advance of the loan is to a shareholder, the provisions of the section will not apply. Since the HUF is not a shareholder, clearly Section 2(6A)(e) is not applicable. the latter portion of the question referred, therefore, will have to be answered to the effect that no amount could be brought to tax under Section 2(6A)(e), and that is against the revenue. Though the first part of the question also is covered by a decision of this court in G. Ramaswamy Naidu v. CIT : 86ITR768(Mad) , wherein it has been held that development rebate reserve will also be accumulated profit, that question does not arise for consideration in view of our answer to the latter part of the question referred. We, therefore, do not propose to answer the first part of the question, as it is academic. So, we hold that the four HUFs, who are the asscssecs, could not be taxed on any deemed income under 3. 2(6A)(e). The questions are answered accordingly. The assessees will be entitled to their costs one set. Counsel's fee Rs. 300.
3. A copy of this judgment under the signature of the Registrar and the seal of this court will be sent to the Income-tax Appellate Tribunal.