Sankar Pkasad Mitra, J. - (1.) The assessee is a shareholder of the Bharat Nidhi Limited and also an investment Company. The paid-up capital of the Bharat Nidhi Limited including (included?) a certain number of ordinary shares of Rs. 10.00 each. Some of these shares were fully paid up and some paid up to Rs. 2-8-0 per share. During the financial year ending on the 28th February 1959 (assessment year 1959-60), the assessee received 11,750 shares of the New Central Jute Mills Company Limited from the Bharat Nidhi Limited, by way of dividend in specie.
(2.) The Income-tax Officer Found that the face value of the shares of the New Central Jute Mills Company Limited was Rs. 10.00 only; but the market value was Rs. 14.56 per share. According to the Income-tax Officer, the value of 11,750 shares was, in the premises, Rs. 1,71,080.00. Now, at the general meeting of the New Central Jute Mills Company Limited held on the 31st October, 1958, the amount of dividend declared was Rs. 1,17,500.00 and the Income-tax Officer was of the view that grossing up could be allowed only to the extent of this amount. The difference between Rs. 1,71,080.00 and Rs. 1,17,500.00 was the sum of Rs. 53,580.00. The Income-tax Officer added this difference to the assessee's income on the ground that it "had come out of the unassessed and undisclosed income of! the dividend paying company."
(3.) The Appellate Assistant Commissioner did not agree with the Income-tax Officer's views and directed him to make a fresh assessment after scrutiny of the balance-sheet of the Bharat Nidhi Limited and after consulting the Income-tax Officer assessing the Bharat Nidhi Limited. He did not, however, give any specific direction regarding the amount of dividend or the amount to be grossed up.;