Judgment

SHAH, J. : This is a group of appeals against order passed by the High Court of Bombay in Income Tax References under S. 66(1) of the Indian Income tax Act.

2. Chellsons Ltd. - a Private Company - was incorporated in April 1941. The shareholders of the company at the material time were Kishinchand Chellaram holding 6 shares and Shewakram Kishinchand, Lokumal Kishinchand and Murli Tahilram each holding three shares. Kishan-chand, Shewakram and Lokumal were directors of the company. At a General meeting of the shareholders of the company held on July 10, 1943, it was resolved to declare dividend at "60 % on the shares" of the company and for the purpose of that declaration the profits of the year 1941-42 were included in the profits of the year 1942-43. Pursuant to this resolution, Rs. 46,000/- were credited in the books of the company to the account of Kishinchand Chellaram on March, 31, 1944, and Rs. 23,000/- were credited to each of the other three shareholders. Another meeting of the shareholders was held on July 15, 1944 and it was resolved to declare dividend at "60 % on the shares" out of the profit of the company for 1943-44. Pursuant to this resolution, on September 2