Harries, C.J. - (1.) This is a reference under Section 66 (1), Income-tax Act, made by the Income-tax Appellate Tribunal, Madras Bench, to this Court in respect of an assessment of the applicant company for the assessment years 1939-40 and 1940-41. The question which has been submitted to the Court for answer is as follows : "Whether in the facts and circumstances of this case, the provisions of Section 23A were properly invoked ?"
(2.) The assessee is a private limited company whose main source of income is income from property assessable under Section 9, Income-tax Act. Its only other source of income is interest on deposits, but such income is only slightly over 1 per cent, of the assessable income.
(3.) The relevant accounting years for the two assessments were the calendar years 1938 and 1939. According to the assessee the company made a profit of Rs. 30,000 in 1938 and Rs. 15,000 in 1939 and the whole of the profit for these two years was distributed amongst the share-holders as dividends.;