Judgment :- THANIKKACHALAM, J. As per the direction of this Court, dt. 22nd June, 1981, the Tribunal referred the following three questions for the asst. yr. 1960-61, for the opinion of this Court under s. 256(2) of the IT Act, 1961 : "1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that s. 2(6A)(e) of the Indian IT Act, 1922, is not attracted to the advances of Sivasubramaniam (P) Ltd., to the assessee in the previous year relevant to the asst. yr. 1960-61 ? 2. Whether the Tribunal and any material to hold that the said company was doing any business other than the moneylending business during the assessment year ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal had any material to hold that the moneylending business constituted a substantial part of the business of the said company ?" 2. The assessee is an individual, who is a shareholder in the company of Sivasubramaniam (P) Ltd., Tirupur. The company was incorporated on 5th December, 1950, with six shareholders. The assessee is one of the shareholder. They were also directors. The company was having the business of running a knitting factory, which was closed in the asst. yr. 1959-60 and the machineries were also sold in the asst. yr. 1960-61. Thereafter the company was advancing its capital as loan and thus carried on moneylending business. In the asst. yrs. 1958-59 and 1959-60 assessments were made, treating the interest received in respect of the advances as business income. In the asst. yrs. 1960-61 to 1963-64 also it was recorded that the business of the company included moneylending business. During the previous year ended 31st December, 1959, the assessee had taken a loan of Rs. 95, 570. There was an accumulated profit in the company's account to the extent of Rs. 52, 617. The assessee contended that the loan to the extent of Rs. 52, 617 should be treated as attributable to accumulated profit, and, therefore, it is a loan advanced to the assessee on which the assessee claimed that it would not amount to dividend as per the provisions contained in s. 2(6A)(e)(iii) of the Indian IT Act, 1922 (hereinafter referred to as the Act). However the ITO deemed it to be dividend under s. 2(6A)(e) of the Act. However the ITO deemed it to be dividend under s. 2(6A)(e) of the Act. According to the assessee, the sum of Rs. 52, 617 cannot be deemed to be the dividend, but it should be considered as a loan advanced out of the accumulated profit. On appeal, the AAC confirmed the view taken by the ITO, holding that the sum of Rs. 52, 617 advanced to the assessee should be deemed to be dividend income. Aggrieved, the assessee went in appeal before the Tribunal. The Tribunal, considering the facts that during the assessment year under consideration that the company was doing only the moneylending business and it had accumulated profit, and therefore, the sum of Rs. 52, 617 advanced to the assessee should be treated as a loan as contemplated under s. 2(6A)(e)(iii) of the Act. 3. The learned standing counsel for the Department submitted before us that there is no basis for the Tribunal to come to the conclusion that the sum of Rs. 52, 617 advanced to the assessee is not dividend. No material was brought on record before the Tribunal to establish that the abovesaid advance to the assessee is a loan out of the accumulated profit. According to the learned standing counsel the advance made by the company to the assessee to the extent of Rs. 52, 617 would stand attracted by the provisions contained in s. 2(6A)(e) of the Act, since what was paid to the assessee is only in the nature of dividend. 4. We have heard the learned standing counsel for the Department and perused the records carefully. The assessee is one of the shareholder of the company known as Sivasubramaniam (P) Ltd. The company was incorporated on 5th December, 1950. There were six shareholders, who were also directors of the company. The assessee is one of the shareholder. Originally the company was doing business in running a knitting factory, which was closed in the asst. yr. 1959-60 and the machineries were also sold in the asst. yr. 1960-61. Thereafter the assessee-company was doing moneylending business with the capital already in existence and the sale proceeds derived out of the sale of the machineries. Assessments have been made in the asst. yrs. 1958-59, 1959-60 and 1960-61 to 1963-64 treating the income of the assessee as business income. In the assessment year under consideration, the assessee took a loan of Rs. 95, 570. Assessments have been made in the asst. yrs. 1958-59, 1959-60 and 1960-61 to 1963-64 treating the income of the assessee as business income. In the assessment year under consideration, the assessee took a loan of Rs. 95, 570. The company had an accumulated profit of Rs. 52, 617. The assessee claimed that the loan to the extent of Rs. 52, 617 should be treated as loan advanced to the assessee and it should not be treated as dividend under s. 2(6A)(e) of the Act. The assessee relied upon the provisions contained in s. 2(6A)(e)(iii) of the Act, wherein it is stated that any advance or loan made to a shareholder by a company in the ordinary course of its business where the lending of money is a substantial part of the business of the company, it should not be treated as dividend income. 5. The Tribunal recorded the facts as the company had accumulated profits to the extent of Rs. 52, 617 and the substantial part of the business of the company during the assessment year under consideration was moneylending business. The company was doing no other business, except moneylending business and the company went into liquidation on 6th June, 1966. On these facts, the Tribunal came to the conclusion that the sum of Rs. 52, 617 advanced to the assessee in the assessment year under consideration cannot be treated as dividend income, but it should be treated as loan advanced to the assessee as per the provisions contained in s. 2(6A)(e)(iii) of the Act. Inasmuch as the Tribunal came to the abovesaid conclusion on the basis of the facts available on record, we answer question No. 1 in the affirmative and against the Department. Insofar as question No. 2 is concerned, it does not arise out of the order of the Tribunal as framed and suggested by the Tribunal at the instance of the Department. Insofar as question No. 3 is concerned, it is also answered in the affirmative and against the Department. No costs.