JUDGMENT :

J.M. Shelat, J.

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 1958-59 of which the previous year is the year ending 30th of September, 1957.

3. The assessee-company, a private limited company, went into voluntary liquidation on the 23rd of August, 1952. At the time of liquidation, the assessee-company had at its disposal rupees twenty-five lakhs, 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 of September, 1952, relevant to the assessment year 1953-54, that the income-tax department treated as dividend under section 2(6A)(c) of the Act, as it then stood, and brought that amount to tax. On the 20th of July, 1957, the liqui