Untwalia, J. - (1.) This is an appeal by an assessee on grant of a certificate of fitness by the Bombay High Court under Section 66-A (2) of the Income Tax Act, 1922 - hereinafter referred to as the 1922 Act. The assessee is an individual. We are concerned in this case with his assessment for the assessment year 1958-59 - corresponding accounting year being 1st April, 1957 to 31st March, 1958. The Income-tax Tribunal made a composite order disposing of the assessee's appeals in respect of two assessment years i.e. 1958-59 and 1959-60. The decision of the Tribunal was partly in favour of the assessee and partly in favour of the Revenue. In respect of the assessment year 1958-59, a reference under Section 66 (1) of the 1922 Act was made by the Tribunal to the High Court. Four questions were referred - one at the instance of the Commissioner of Income-tax and three at the instance of the assessee. The High Court by its judgment under appeal which is reported in Commissioner of Income-tax (Central), Bombay v. P. K. Badiani, 76 ITR 369 = (1971 Tax LR 97) (Bom), has answered almost all the questions against the assessee. Hence this appeal.
(2.) Mr. V. Rajgopal who had argued the case of the assessee before the High Court appeared before us in support of the appeal also. He could not and did not attack the decision of the High Court as respects questions 2, 3 and 4. But he strenuously urged before us for reversal of the High Court judgment in regard to question No. 1 which was referred at the instance of the Commissioner. If the assessee could succeed before us in getting an answer in his favour to the said question, then, substantially he would have succeeded in getting the whole of the relief.
(3.) The first and the only question which falls for our examination in this appeal was referred by the Tribunal to the High Court in the following terms: "(1) Whether the development rebate reserve created by the company by duly charging the amount to the profit and loss account and being allowable under the Act constituted accumulated profits of the company within the meaning of Section 2 (6-A) (e) of the Act -;