Deb, J. - (1.) This is a reference under Section 66(1) of the Indian I.T. Act, 1922. The Tribunal has referred the following question to this court: "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the order of the Commissioner of Income-tax made under Section 33B(1) of the Indian Income-tax Act, 1922, was bad in law in so far as it directed the Income-tax Officer to pass a fresh order under Section 23A(1) of the Indian Income-tax Act, 1922 ?"
(2.) The statement of the case relates to the assessment years 1955-56 and 1956-57 for which the relevant accounting years are the previous years ending 31st December, 1955, and 31st December, 1956, respectively. The assessee is a company to which Section 23A(1) of the Indian I.T. Act, 1922, applies. In view of the interim dividends declared by the assessee on February 19, 1956, and December 14, 1956, for the assessment years 1955-56 and 1956-57, respectively, the ITO dropped the proceedings under this section initiated by him after obtaining the approval of the IAC.
(3.) As the assessee actually distributed the dividends after the expiry of 12 months of the close of the relevant accounting periods, the CIT considered that the interim dividends should not have been recognised by the ITO and the orders dropping the proceedings were erroneous in so far as they are prejudicial to the interests of the revenue. Therefore, after giving an opportunity to the assessee of being heard under Section 33B(1) of the Indian I.T. Act, 1922, the Commissioner set aside the orders of the ITO and directed him to pass fresh orders under Section 23A{1) of the Act in accordance with law.;