JUDGMENT :

J.M. Shelat, J.

1. This is a Reference under section 66 (1) of the Income-tax Act at the instance of the assessee company.

2. The relevant assessment year is 1958-1959 of which the previous year is the year ending 30th September, 1957.

3. The assessee company, a private limited company, went into voluntary liquidation on the 23rd August, 1952. At the time of liquidation, the assessee company had at its disposal rupees twenty-five lacs, being its paid-up capital, and Rs. 5,34,041 being the accumulated profits. Prior to the assessment year 1958-59, the liquidator had made the following distributions :

4. However, it was only Rs. 50,500 out of the distribution made during the accounting year ending 30th September, 1952, relevant to the assessment year 1953-54, that the Income-tax Department treated as dividend under section 2(6-A)(c) of the Act, as it then stood and brought that amount to tax. On the 20th July, 19