Dipak Kumar Sen, J. - (1.) In this reference under Section 66(1) of the Indian Income-tax Act, 1922, the question referred is as follows : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that it would be unreasonable to require the company to distribute any dividend in respect of the previous year ended March 31, 1958, and setting aside the order under Section 23A(1) of the Indian Income-tax Act, 1922, levying additional super-tax in respect of the assessment year 1958-59."
(2.) From the facts found as appearing in the statement of the case and its annexures it appears that during the assessment year in question, that is 1958-59 (the relevant previous year ending on 31st March, 1958) an order was passed by the Income-tax Officer under Section 23A of the Indian Income-tax Act, 1922, levying additional super-tax. The Income-tax Officer worked out the distributable surplus at a figure of Rs. 48,619 being the difference between the total income assessed at Rs. 1,00,245 and the taxes payable thereon amounting to Rs. 51,625.
(3.) In appeal it was contended by the assessee before the Appellate Assistant Commissioner that there would be no surplus left if the true commercial profits were worked out after taking into account arrear taxes for the assessment years 1955-56 and 1956-57. It was contended that such arrears amounted to Rs. 52,450, The Appellate Assistant Commissioner rejected the assessee's contention as regards the arrear taxes and observed that for the assessment year 1955-56, no tax was found to be payable as a result of the Tribunal's order and for the assessment year 1956-57, the tax payable as determined in appeal amounted to only Rs. 8,732. The Appellate Assistant Commissioner came to the conclusion that there was adequate surplus to justify a declaration of dividend and upheld the order under Section 23A.;