Ajit K. Sengupta, J.

1. THESE two references--one under Section 66(1) of the Indian Income-tax Act, 1922, and the other under Section 66(2) of the Indian Income-tax Act, 1922--relate to the assessment year 1959-60. Since both the references arise out of the same order of the Tribunal relating to one and the same assessment year, we propose to dispose of the two references by one judgment.

2. SHORTLY stated, the facts are as follows : During the year under consideration, the total income of the assessee was determined at Rs. 3,79,441 on which income-tax was assessed at Rs. 2,16,012 and as such the available surplus was Rs. 1,63,429. The assessee, however, declared dividend of Rs. 1,25,000. The Income-tax Officer held that the assessee was a company whose business consisted wholly in the holding of investments and therefore 100% dividend ought to have been declared. Accordingly, he held that Section 23A of the Indian Income-tax Act, 1922, was clearly applicable in this case. The assessee explained that the facts of the case did not warrant a larger distribution. It was claimed that there was a huge loan payable by the company, that the cash and bank balances were poor and that