Lord Thankerton:-

This is an appeal from a judgment of the High Court of Judicature at Bombay, dated 28th March 1935 upon a question of law referred to the High Court by the present appellant under S.66, Indian Income-tax Act, 1922. The question arises out of the assessment of the respondents to income-tax for the financial year ending 31st March 1932 and concerns the computation of the profits or gains of their business for the year of account ending on 31st December 1980 under S.10 of the Act. The respondents are a limited liability company doing business at Ahmedabad as manufacturers of cloth and yarn. For the purpose of their assessment for the year ending 31st March 1932 they made a return under S. 22 (1) of the Act on 18th July 1931 to the Income-tax Officer, which consisted of (a) a copy of the audited balance sheet and profit and loss account of the Company for the accounting year ending on 31st December 1930 which showed the profit for the year as Rs.2,64,086, (b) a return of the total income of the Company for assessment, which included the income, profits and gains as per profit and loss account for the accounting year as Rupees 1,99,086 and (c) a covering letter which ex