Judgment

Santosh Hegde, J.-This appeal from the judgment and order of the High Court of Karnataka dated 13.12.1989 made in I.T.R.C. No. 21/82.

2. The following question was referred to the High Court for its opinion under Section 256(1) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) :

“Whether on the facts and in the circumstances of the case, the Tribu­nal was right in law in holding that the provision of Section 104 of the Income-tax Act, 1961 was applicable to the instant case for the assessment year 1975-76?”

3. The facts leading to the abovesaid reference are as follows :

The respondent-Company is a trading company in which the public are not substantially interested. The assessing authority assessed the income of the Company for the assessment year 1975-76 at Rs. 6,27,430/- holding that the Company did not distribute any dividend to its shareholders. The Income Tax Officer initiated proceedings under Section 104 of the Act, demanding additional income-tax of Rs. 31,434/-.

Against the said assessment order, the respondent-Company preferred an appeal before the Appellate Assistant Commissioner. Having failed before the said Authority, a further appeal was preferre