Judgment

HIDAYATULLAH, J. : This appeal is with a certificate granted by the High Court against its judgment and order dated September 9, 1955, in a reference under S. 66(1) of the Indian Income-tax Act. The Tribunal had referred the following questions for the decision of the High Court.

"1. Whether there was any excess dividend declared by the assessee Company?

2. Whether the assessee Company is liable to pay additional income-tax in respect of the excess dividend paid by the assessee Company?"

The High Court answered the first question in the affirmative and the second, in the negative. The Commissioner of Income-tax, Bombay is the appellant before us, and the Jalgaon Electric Supply Co., Ltd. (the assessee Company) is the respondent.

3. The facts of the case are simple. For the assessment years 1949-50 and 1950-51, the book profits of the assessee Company were respectively Rs. 1,22,469 and Rs. 76,886. After adjustment of depreciation allowance and other deductions, the income of the assessee Company was finally assessed at Rs. 3,423 and Rs. 3,312 respectively. The assessee Company declared a divided of Rs. 46,024 in the first year and Rs. 53,323 in the next. The Income-tax Officer