Judgment

SUBBA RAO J. : This appeal by certificate raises the main question whether S. 2(6A)(d) of the Indian Income-tax Act, 1922, hereinafter called the Act, is ultra vires the Central Legislature.

2. The assessee, a public limited company, was incorporated on May 23, 1945, under the Indian Companies Act, 1913, with a share capital of Rs. 50 lakhs. On December 15, 1947, at the instance of the appellant the High Court sanctioned the reduction of the capital of the company from Rs. 50 lakhs to Rs. 25 lakhs. On December 16, 1953, the High Court sanctioned a further reduction of the share capital from Rs. 25 lakhs to Rs. 15 lakhs. On November 4, 1954, the Registrar of Companies granted the requisite certificate under S. 61(4) of the Indian Companies Act. On November 5, 1964, the appellant issued notices to the shareholders inviting applications for the refund of share capital so reduced. On the receipt of the applications, appropriate debit entries were made in the accounts of the shareholders and the amounts were actually paid to them during the previous year, i.e., December 1, 1954 to November 30, 1955. Under S. 2(6A)(d) of the Act, "dividend" includes any distribution by a company o