( 1 ) THIS is a reference under Section 66 (1) of the Indian Income-tax Act, 1922. The assessee is a private limited company. Its shares were held by the members of the Nawn family. Its main source of income was from property assessed under Section 9 of the Act in the relevant years. There is no dispute that the provisions of Section 23a of the Act are applicable to the assessee.

( 2 ) THE facts relevant for our purposes to invoke the provisions of Section 23a in the assessment years under consideration are as follows :

Dividend declared

1955-56 31-3-1955 236,242 100,562 135,680 100,000

1956-57 31-3-1956 250,464 108,795 141,669 100,000

1957-58 31-3-1957 257,986 151,087 106,899 87,500

1959-60 31-3-1959 361,338 209,505 151,333 100,000

Assessment year

Accounting year ended

Total income assessed Tax payable Undistributed balance of total income

( 3 ) NOW, Section 23a gives power to the Income-tax Officer to assess companies to super-tax on undistributed income in certain cases. Explanation 2 to the section prescribes the different statutory percentages in the cases of different classes of companies. A company in order to avoid the