Ajit Kumar Sengupta, J. - (1.) In this reference under Section 256(1) of the I.T. Act, 1961, the following two questions of law have been referred to this court for the assessment years 1967-68 and 1968-69 : " 1. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the income received by the assessee through the trust was an income by way of dividend within the meaning of Section 80M of the Income-tax Act, 1961 ? "
(2.) Without prejudice to question No. 1, whether, on the facts and in the circumstances of the case, and on a correct interpretation of Section 80M of the Income-tax Act, 1961, the assessee was entitled to the deduction under the said section in respect of the income received through the trust ? " 2. The facts which are admitted and/or found by the Tribunal are stated hereinafter.
(3.) In the assessment for the assessment year 1967-68, a sum of Rs. 28,53,698 by way of gross dividend from a trust was included. From the gross dividend of Rs. 28,63,820, expenses of Rs. 10,122 were deducted and the balance was included. Thereafter, by an order under Section 155 of the Act in respect of the same assessment year, the ITO included the amount of dividend from the trust of Rs. 28,53,698 and the benefit of tax deducted at source of Rs. 6,04,771 was allowed. In neither of the two orders was there any discussion regarding the deduction under Section 80M. For the assessment year 1968-69, the trust dividend of Rs. 28,63,820 was considered and after deducting a sum of Rs. 10,004 on account of expenses, the balance of Rs. 28,53,816 was included in the total income. The benefit of tax deducted at source for Rs. 6,30,040 was allowed. The ITO also granted deduction under Section 80M with reference to the dividend income. By an order under Section 155(5) of the Act, later on, for the same assessment year, the ITO did not disturb either the inclusion of the said dividend income or the deduction under Section 80M.;