JUDGMENT

MANCHANDA J. - This is a case stated u/s 66 (1) of the Income Tax Act of 1922 (hereinafter referred to as the Act). The question referred is :

"Whether, on the facts and in the circumstances of the case, the sum of Rs. 26,000 was tax able income ?"

The material facts are these : The assessee, Ram Sarup, is the son of Lala Roshan Lal. Roshan Lal is the assessee in the connected I. T. Reference No. 245 of 1963. These two constitute one group representing one family. The other group is represented by Lala Purshottam Das and L. Jugul Kishore, who are brothers. The aforesaid four persons were the only shareholders of a private limited company, M/s. Ram Chand and Sons Sugar Mills Ltd. (hereinafter referred to as the mills company). This was, therefore, a family company. The aforesaid four persons had almost equal shareholdings of 25% each. In order to avoid friction between the two families of shareholders, it was agreed between them that the control and management of the mill company should be for a period of one year each by rotation. During the relevant assessment year of 1954-55, it was the turn of Lala Pushottam Das of the second group and he was the direction in charge. It ap