Sudhindra Mohan Guha, J. - (1.) On an application made by the Commissioner of Income-tax (Central), Calcutta, for a reference under Section 66(1) of the Indian I.T. Act, 1922, the Tribunal referred the question stated below after drawing up a statement of case : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the provisions of Section 44F of the Indian Income-tax Act, 1922, were not applicable in the case and the Tribunal was correct in holding the amount of Rs. 94,775 included in the assessment was not taxable for the assessment year 1957-58 ?"
(2.) The assessment year is for 1957-58. The accounting period is the calendar year ended on 31st December, 1956. The assessee was a registered firm. In making the assessment, the ITO noticed that the assessee had sold during the accounting period 20,300 shares of Auto Distributors Ltd. and 5,200 shares of Hindustan Housing and Land Development Trust Ltd. The two companies whose shares were sold had distributed the dividends of Auto Distributors Ltd. at the rate of 100% on March 27, 1956, for the year ending January 31, 1955, and on May 3, 1956, at the rate of 100% for the year ending January 31, 1956, and of Hindustan Housing and Land Development Trust Ltd., at the rate 23% on August 30, 1956, for the year ending on March 31, 1955, and at the rate of 3% on December 28, 1956, for the year ending March 31, 1956.
(3.) On examining the transactions as a whole the ITO came to the conclusion that the provisions of Section 44F of the Indian I.T. Act, 1922, applied. The shares were sold to the trusts created for the benefit of minor children of the partners, wives and mothers of the partners and one charitable trust controlled by the family.;