K.S.Hegde, J.

(1) CIVIL Nos. 1956-57 of 1969 by certificates have become infructuous as the certificates on the strength of which those appeals were brought were not properly issued. To get over that difficulty, the Commissioner of Income-tax applied for and obtained special leave to appeal against the judgment of the High court of Assam and Nagaland. The appeals filed on the basis of the special leave granted are Civil Nos. 1426 and 1427 of 1971. At present we are only concerned with those appeals

(2) THE judgment under appeal is one rendered in a reference under Section 66(1) of the Indian Income Tax Act ,1922 (to be hereinafter called the Act). The Income Tax Appellate tribunal after staling the case referred the following six questions for the opinion of the High court :

"1. Whether on the facts and in the circumstances of the case and upon a true interpretation of the provisions of the Second proviso to Section 34(3), the assessment for the year 1955-56 on the applicant Hindu undivided family made on 6/02/1961, pursuant to an order under S. 27, cancelling the assessment of Shri S. M. Saharia, as an individual, was barred by limitation?

2. Whether on the facts end in the circumstances of the case, and on a true interpretation of the terms of S. 2 (6-A)(e) of the Income Tax Act, 1922, the tribunal was right in holding that the amounts of Rs. 2,21,702 (gross) and Rs. 3,43,505.00 (net) were taxable as dividends in the hands of the applicant H. U. F. for the assessment years 1955-56 and 1956-57 respectively, when the shares were registered in the name of Sri S. M. Saharia, the Karta of the family?

3. Whether on the facts and in the circumstances of the case, there was any material before the tribunal to justify the conclusion that Sri S. M. Saharia was holding shares in Messrs. Shyam Sunder Tea Co. (Private) Ltd. in his capacity as Karta of the applicant family consisting of himself and his minor son?

4. Whether on the facts and in the circumstances of the case, there was any material before the tribunal for the finding that the applicant family was the beneficiary uptil 16/08/1955, in respect of 50 shares registered in the name of Sri S. M. Saharia on 16/05/1953, before the disruption in the joint status of the family of Hanutram Ramprotap?

5. Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that the Hindu undivided family of Hanutram Ramprotap was not a shareholder in M/s. Shyam Sundar Tea Company (P) Ltd. uptil 16/08/1955?

6. Whether on the facts and in the circumstances of the case, in computing the accumulated profits of Messrs. Shyam Sunder Tea Co. (P) Ltd. within the meaning of S. 2 (6-A)(e), the tribunal acted rightly in refusing to allow-

(A) deduction in respect of loans advanced by the said Company to the erstwhile family of Messrs. Hanutram Ramprotap which amounted to Rs. 3,60,989.00 as at 31/12/1954, and increased to Rs. 3,80,567.00 as at 16/08/1955, and written off at the end of the year 1955 ;

(B) deduction in respect of Rs. 51,049.00 and Rs. 66,206.00 for the assessment years 1955-56 and 1956-57, respectively, being the difference between the written down value of depreciable assets of the said Company as per income-tax records and their book value."

(3) THE High court has answered the first two questions in favour of the assessee and it did not go into the other questions as it opined, in view of the answers given to the second question, there was no need to answer the remaining questions. For the reasons to be presently stated, we have come to the conclusion that the answer given by the High court to the first question is correct and that given by it to the second question is wrong. As a result of our finding, the appeal relating to the assessment year 1955-56 viz. Civil Appeal No. 1426 of 1971 has to be disimissed. But the appeal relating to the assessment year 1956-57 should be allowed and the case r