( 1 ) THIS appeal under section 260a of the Income Tax act, 1961 (1961 Act) has since been preferred against the order dated 28th of January 2005 passed by the learned Tribunal in the block assessment against the assessee for the period 1st April 1990 to 24th of August 2000. The dispute relates to a few entries for the previous year 1999-2000 in relation to the assessee's investment in 9% RBI relief Bonds amounting to Rs. 6,93,00,000/- out of total investment of rs. 26,35,00. 000/- made in the said previous year. The Assessing Officer had treated these investments as deemed dividend at the hands of the assessee within the meaning of section 2 (22) (e) of the 1961 Act.

( 2 ) IN order to appreciate the situation, we may briefly refer to those portions of facts, which are relevant for the present purpose. M/s. M. K. Tea Pvt. Ltd. (MKTPL), in which the assessee is one of the shareholders, paid Rs. 69,00,000/- on 7th of December 1999 and Rs. 25,00. 000/- on 22nd December 1999 to M/s. M. K. Foundation (MKF), a partnership firm, in which the assessee was one of the partners. M/s. Safari Capitals pvt. Ltd. (SCPL), in which the assessee was a beneficial owner of snares, paid a sum of Rs. 2,04,00,000/- on 11th of January 2000 and rs. 75,00. 000/- on 28th of January 2000 to M/s. M. K. Industries (MKI)in which the assessee is one of the partners. M/s. M. K. Shah Exports pvt. Ltd. (MKSEPL) paid a sum of Rs. 1,10,00,000/- on 1st December 2000, rs. 1,10,00. 000/- on 4th December 2000 and Rs. 1,00,00,000/- on llth february 2000 to MKF. Apart from these amounts, various other amounts were also paid by the respective companies to the respective firms out of which the RBI Relief Bonds were purchased by the assessee during the previous year 1999-2000 amounting to Rs. 26,35. 00. 000/ -. Except the amounts referred to above, the rest payments were held to be disclosed income and were exempted from being taxed under the block assessment. Whereas these seven transactions were held to be deemed dividend received at the hands of the assessee.

( 3 ) EXTREME, erudite and elaborate arguments have been made by both Mr. N. K. Poddar, learned senior counsel appearing on behalf of the assessee, and Mr. D. K. Shome, learned senior counsel appearing for the Department. Our attention was drawn to various facts, materials, laws and decisions. Various intricacies of fine argument were advanced by both the learned counsel.

( 4 ) HAVING regard to the facts and circumstances and the issues involved, in our view, the question does not seem to pose any difficulty and can be answered simply on the basis of the admitted facts applying the relevant tests for treating those amounts as deemed dividend. The question is dependent simply on the interpretation of the provisions of section 2 (22) (e) of the 1961 Act and its applicability in the given facts available in the case.

( 5 ) THE definition of 'deemed dividend' defined in section 2 (22) (e)applies to three categories of cases. The first category relates to any payment made by a company, in which public are not substantially interested, by way of loans or advances to a shareholder having not less than 10% voting power. The second category includes any payment of such a company to any concern in which such shareholder is a member or a partner having substantial interest not less than 20% of the income of such concern. The third category relates to any payment by any such company on behalf or for the individual benefit of any such shareholder. But in all these three categories the extent of deemed dividend is confined to the available accumulated profits of such company.

( 6 ) THE assessee had claimed that he did not have the requisite shareholding in MKTPL during the previous year 1999-2000, namely he was beneficial owner of share holding with 9. 3% of its total voting power. The assessee further claimed that during the said financial year 1999-2000 he had only 0. 20% of shares in SCPL out of its tota