Deb, J. - (1.) We are concerned in this reference under Section 66(1) of the Indian Income-tax Act, 1922, with the following question of law : "Whether, on the facts and in the circumstances of the case and on a proper construction of Clause (c) of the second proviso to Para. D of Part II of the First Schedule to the Finance Act, 1959, the Tribunal was right in holding that the sum distributed as dividends was Rs. 47,000 and not Rs. 1,05,000?"
(2.) The assessee is a private limited company. Its accounts are closed at the end of each calendar year. The calendar year with which we are concerned is 1958 for which the assessment year is 1959-60.
(3.) For the calendar year 1957, the assessee made up its accounts and its audited balance-sheet was passed by the shareholders in the annual general meeting of the company held on December 4, 1958. In the report accompanying the accounts, the directors recommended the distribution of Rs. 1,05,000 as dividends. In the aforesaid annual general meeting the aforesaid recommendation as to declaration of dividends was approved by the shareholders.;