1. This reference arises in the following circumstances. The assessee, Messrs. Bangodaya Cotton Mills limited, is a Company and there is no dispute that it was a Company in which the public were not substantially interested within the meaning of Explanation 1 to Section 23a (9) of the Indian Income-tax Act, 1922 for the assessment years 1955-56 and 1956-57, the corresponding previous years of the company being the financial years ending on the 31st March, 1955 and the 31st march, 1956 respectively. There is also no dispute that for those two years, under the provisions of Section 23a as it then stood, the Company had to distribute 60 per cent, of its distributable surplus as determined under that section. The Income-tax Officer found that the co.'s assessed profits were Rs. 4,14,669 and Rs. 5,34,366 respectively and after deduction of income tax and super tax payable thereon, the distributable surplus amounted to Rs. 2,23,491/ - and Rs. 3,02,824/- respectively for the aforesaid two years. As the Company had mot declared any dividend within the statutory period of 12 months from the end of the- respective previous years, the income tax Officer required the assessee to show