Judgement

SUBBA RAO, J. : - This appeal by certificate raised the question of the construction of the provisions of S. 23A of the Indian Income-tax Act, 1922, hereinafter called the Act, before it was amended by the Finance Act, 1955.

2. The relevant and undisputed facts may be briefly stated. Messrs. Gangadhar Banerjee and Co. (Private) Ltd., the respondent herein, is a private limited company. At the General Body Meeting of the Company held on December 6, 1948, the Directors declared a dividend at the rate of 5 1/2 per cent per share. The said distribution of dividends related to the accounting year 1947-48 which ended on April 13, 1948. According to the balance-sheet of the Company for that year the net profit for the said year was Rs. 1,28,1 12/ 7 / 5. The taxation reserve was Rs. 56,000. The profit left was Rs. 72,000. The Directors declared a dividend at the rate of 5 1/2 per cent per share thus making a total distribution of Rs. 44,000. On that basis the profit that was available for further distribution was Rs. 28,000. Though under the balalce-sheet the estimated tax was Rs. 66,000, the tax assessed for the year was Rs. 79,400. If the difference between the tax assessed and t