Judgment

SHAH, J. : The Income Tax Appellate Tribunal, Bombay Bench "A" referred under S. 66(1) of the Indian Income Tax Act, 1922 - hereinafter referred to as the Act - the following question :

"Whether the sum of Rs. 15608 should have been included in the assessee Company s "profit" for the purpose of determining whether the payment of a larger dividend than that declared by it would be unreasonable ?"

2. The High Court answered the question in the negative. Against the order of the High Court, with special leave under Art. 136 of the Constitution, this appeal is preferred.

3. M/s. Bipinchandra Maganlal & Co., Ltd. - hereinafter referred to as the Company - is registered under the Indian Companies Act. The Company is one in which the public are not substantially interested within the meaning of S. 23A Explanation of the Act. Its paid-up capital at the material time was Rs. 20,800 made up as follows :

20 shares of Rs. 50 each fully paid up and 1980 shares of Rs. 50 each, Rs. 10 being paid up per share.

4. In December 1945, the Company purchased certain machinery for Rs. 89,000 and sold it sometime in March, 1947, for the price for which it was originally purchased. In the books of accou