JUDGMENT:

HIDAYATULLAH . J.-This is an appeal on a certificate of fitness granted by the High Court of Bombay against the judgment of the High Court dated March 13, 1958, on a reference made by the Income-tax Appellate Tribunal. The Commissioner of Income-tax, Bombay City I, is the appellant and the Jubilee Mills Ltd., Bombay, the respondent. The only question raised in this appeal is the application of section 23A of the Income-tax Act to the assessee company.

The assessee company is a limited liability company with a paid-up capital of Rs. 15,25,000. Its paid up capital is made up as under:

I lakh ordinary shares of Rs. 10 each  Rs. 10,00,000

5,000 cumulative preference shares of

Rs. 25- paid-up. Rs. 1,25,000

4,000 second preference shares of

Rs. 100 each fully paid-up. Rs. 4,00,000

The second preference shares do not entitle the holders to vote. Thus shares of the assessee company carrying votes are 1,05,000. This was the position on June 30, 1947. We are concerned with the assessment year 1948-49 corresponding to the previous y