Ramaswami, J.:— The assessee was originally a private limited company incorporated in July, 1942, but later on converted into a public limited company on 25th August, 1948. For the assessment year 1954-55, corresponding to the previous year ending 31st December, 1953, the assessee had not declared any dividend. The Income-tax Officer found that it was not a company in which the public were substantially interested. In that view, he passed an order under section 23A(1) of the Indian Income-tax Act, 1922, (hereinafter called “the Act”), treating the sum of Rs. 2,43,588, being the undistributed portion of the assessable income, as dividend deemed to have been distributed among the shareholders of the company. This order was made on the finding that equity shares of the assessee carrying not less than 25 per cent, of the voting power were not beneficially held by the public at the end of the relevant previous year and that the shares of the assessee-company were not the subject of dealings in any stock exchange and the shares were not in fact freely transferable by the holders to other members of the public. On appeal, the Appellate Assistant Commissioner was of the view that one of the shareholders of the company, namely, the Saroja Mills, was a company in which the public were substantially interested and since this company held more than 25 per cent, of the voting power in the assessee-company, the first condition relating to 25 per cent, of the voting power being vested in the public is satisfied. The Appellate Assistant Commissioner was also of the view that clause 13 of the articles of association of the company, which vested in the directors a discretion in the matter of transfer of shares, does not in any way go to show that the shares were not freely transferable to the other members of the public. In that view, he held that section 23A of the Act is not applicable. The revenue preferred an appeal to the Tribunal. Before the Tribunal, the assessee filed a statement listing out the transfers of shares effected in the company from the date of its incorporation till the date of the filing of the appeal. That statement showed that two transactions of transfers were effected in the years 1942 and 1948 prior to the end of the previous year relevant to the assessment year 1954-55 and there were about 19 transactions subsequent to the end of the previous year. The Tribunal took the view that the position as it stood up to the end of the relevant previous year was only relevant and the transfers which took place after the end of the relevant year have no bearing on the interpretation or the applicability of section 23A. In that view, the Tribunal called for a report from the Income-tax Officer regarding the two transfers effected in 1942 and 1948 on the question of free transferability of the shares to the public. After receipt of that report, the Tribunal, while upholding the finding of the Appellate Assistant Commissioner that 25 per cent, of the voting power in the assessee-company was held by the public at the end of the relevant assessment year in view of the fact that one of the shareholders, namely, the Saroja Mills, which was holding 25 per cent, of the shares, was a company in which the public were substantially interested, did not agree with the Appellate Assistant Commissioner that the shares were freely tranferable to the public. At the instance of the assessee, the following question was referred to this court in T.C No. 155 of 1962 (East India Corporation Ltd., Madurai…Applicant; v. Commissioner Of Income-Tax, Madras…. [1966] 61 ITR 16, 21 Mad.):

“Whether, on a proper construction of the articles of association of the company, the shares are in fact freely transferable by the holders to other members of the public so as to become liable to an order under section 23A?”

2. The other question, which was referred relating to the direction given by the Tribunal under section 34(3), is not material for the purpose of deciding the present reference. Therefore, it is unnecessary to note the same in this judgment. It was argued by the learned counsel for the assessee in that case that the transfer of shares of the assessee-company made subsequent to the relevant previous year would be germane to a consideration of the character of the company for the purposes of section 23A and that the Tribunal was wrong in holding that the transfers subsequent to the previous year were not germane. This court held in the decision reported in East India Corporation Ltd., Madurai…Applicant; v. Commissioner Of Income-Tax, Madras…., that in testing whether the company is one in which the public are substantially interested transfers of shares even subsequent to the relevant previous year could be taken into account, like the transfer of shares during and prior to that period. In that view, this court observed:

“We are, therefore, of the view that the Tribunal will have to assess the relative facts over again to see whether the assessee is a company in which the public are substantially interested more especially when we have not accepted the Tribunal's view that only transfers prior to the end of the relevant previous year could be taken into account. We do not have before us the necessary facts and circumstances in the light of which we can ourselves express an opinion as to whether the transfers of shares between November, 1955 and June, 1959, are to members of the public.”

3. In the course of the proceedings under section 66(5) of the Act the Tribunal felt that in order to give a satisfactory finding on the question of free transferability of the shares to the public, further facts would have to be found and that it would be advantageous to both sides to call for a report from the Appellate Assistant Commissioner regarding the additional facts which are necessary for the final disposal of the case. On behalf of the assessee it was contended that the Tribunal had no such jurisdiction to call for a report regarding additional facts and it would have to decide the issue by itself on the material on record. But the Tribunal did not agree with this contention of the assessee. It took the view that as per the directions of this court in the earlier reference, the transfers of shares subsequent to the relevant previous year have to be examined, and that it would also be necessary to ascertain whether the transfers were exclusively to the family members of Sri Thiagaraja Chettiar or to the limited companies whose shares were held exclusively by the members of his family. In that view, it called for a finding from the Appellate Assistant Commissioner. At the instance of the assessee, the following question has been referred under section 66(1) of the Act:

“Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in remanding the case to the Appellate Assistant Commissioner of Income-tax for a report regarding the transfer of shares?”

4. The learned counsel for the assessee strenuously contended that the order of the Tribunal calling for a report from the Appellate Assistant Commissioner enlarges the scope of the enquiry of the Tribunal and it was beyond the jurisdiction of the Tribunal to direct the Appellate Assistant Commissioner to call for additional facts and submit the report. According to the learned counsel, the assessee had already filed before the Tribunal, on the prior occasion, a statement showing the transfers effected on the various dates and the Tribunal itself will have to go into that question on the basis of the statement filed by him. He was not even prepared to concede that even on the question of fictitious nature of the transfers, the Tribunal had any jurisdiction to make any enquiry or cause an enquiry to be made by the Appellate Assistant Commissioner.

5. Under section 66(5) of the Act the Tribunal shall have to pass such orders as are necessary to dispose of the case conformably to the judgment in the reference. The ambit of the jurisdiction of the Tribunal, when passing an order under section 66(5) has come up for consideration in Income-tax Appellate Tribunal v. S.C Cambatta and Co., Rajkumar Mills Ltd. v. Income-tax Appellate Tribunal, Hukumchand Mills Ltd. v. Commissioner of Income-tax [1967] 63 ITR 232 SC. and Esthuri Aswathiah v. Commissioner Of Income Tax, Mysore [1967] 66 ITR 478 SC., among other cases.

6. In Income-tax Appellate Tribunal v. S.C Cambatta and Co. [1956] 29 ITR 118 Bom., the question for consideration was as to whether there could be a reference made to the High Court under section 66 out of an order made by the Tribunal under section 66(5). It was held:

“……reading section 33(5) and section 66(9) together, the scheme is fairly clear that when a reference is made to the High Court either under section 66(1) or section 66(2) the decision of the Appellate Tribunal cannot be looked upon as final; in other words, the appeal is not finally disposed of It is only when the High Court decides the case, exercises its advisory jurisdiction, and gives directions to the Tribunal on questions of law, and the Tribunal reconsiders the matter and decides it, that the appeal is finally disposed of In one sense, as the learned judge rightly points out, it may be said that on the High Court giving its decision there is a continuation of the appeal under section 33, in another sense it may be said that there is a re-hearing of the appeal by the Appellate Tribunal, but it is clear that what the Appellate Tribunal is doing after the High Court has heard the case is to exercise its appellate powers under section 33.”

7. In this view, the Bombay High Court held that if a question of law arises out of the final decision made subsequent to the opinion of the High Court in the earlier reference, that could also be referred under section 66. But, they made it clear that the question of law which can be agitated in the second reference would only be those which do not arise out of the first order passed by the Tribunal and which have not been considered by it in its first order. If a question has been considered and no reference is sought, then it is not open to the assessee or the revenue to seek a reference at the subsequent stage.

8. Rajkumar Mills Ltd. v. Income-tax Appellate Tribunal is an interesting case on this question. Originally, the Income-tax Officer held that a particular item amounting to Rs. 6,02,911 was assessable under section 4(1)(c) of the Act as income accrued in India. This order was confirmed by the Appellate Assistant Commissioner and the Tribunal. But, on a reference, the High Court and the Supreme Court held that the amount could not be taxed on accrual basis under section 4(1)(c). When the matter was taken up for passing orders under section 66(5) in conformity with the answer given by the High Court and the Supreme Court, the Tribunal considered that out of the sum of Rs. 6,02,911 a sum of Rs. 5,80,069 was actually received in India. The Tribunal also found that though the assessee had mentioned this figure of Rs. 5,80,069 as having been received by him in India, the Income-tax Officer did not consider the taxability of this sum on receipt basis under section 4(1)(a). This was because the Income-tax Officer included the larger amount of Rs. 6,02,911 and held that it was liable to be taxed under section 4(1)(c). Since the High Court and the Supreme Court had held that it was not liable to be taxed under section 4(1)(c), the Tribunal remanded the matter to the Income-tax Officer to consider the question of applicability of section 4(1)(a) to the said amount of Rs. 5,80,069 received by the assessee in India. A writ petition was filed challenging this order of the Tribunal remanding the matter to the Income-tax Officer for considering the question whether section 4(1)(a) was applicable in respect of the sum of Rs. 5,80,069. It was held that the Tribunal would have had jurisdiction under section 33 on the first occasion when, the matter came up for hearing to remand the matter to the Income-tax Officer to consider the question of the applicability of section 4(1)(a). But, neither the Appellate Assistant Commissioner nor the Tribunal had any occasion to consider that question because they were agreeing with the Income-tax Officer on the question of applicability of section 4(1)(c). When the High Court held that section 4(1)(c) was not applicable and the matter was dealt with by the Tribunal under section 66(5), it had the same powers under section 33 and, therefore, the Tribunal was within its jurisdiction in remanding the matter to the Income-tax Officer for the purpose of consideration of the applicability of section 4(1)(a), in respect of the sum of Rs. 5,80,069. Hukumchand Mills Ltd. v. Commissioner of Income-tax dealt with the powers of the Tribunal under section 33. It was held that the Tribunal has sufficient power under section 33(4) to entertain any additional grounds and remand the case to the Income-tax Officer to consider the additional ground and that rules 12 and 27 of the Appellate Tribunal Rules, 1946, relating to the powers of the Tribual to admit additional grounds, are merely procedural in character and do not in any way circumscribe or control its powers under section 33(4). In Esthuri Aswathiah v. Commissioner Of Income Tax, Mysore, the Supreme Court approved the decisions of the Bombay High Court in Income-tax Appellate Tribunal v. S.C Cambatta and Co. Ltd. and Rajkumar Mills Ltd. v. Income-tax Appellate Tribunal above referred to and further observed:

“Section 66(5) of the Indian Income-tax Act, 1922, requires the Tribunal on receiving a copy of the judgment of the High Court to pass such orders as are necessary to dispose of the case conformably to such judgment. This clearly imposes an obligation upon the Tribunal to dispose of the appeal in the light of and conformably with the judgment of the High Court. Before the Tribunal passes an order disposing of the appeal, there would normally be a hearing. The scope of the hearing must, of course, depend upon the nature of the order passed by the High Court. If the High Court has agreed with the view of the Tribunal, the appeal may be disposed of by a formal order; if the High Court disagrees with the Tribunal on a question of law, the Tribunal must modify its order in the light of the order of the High Court; if the High Court has held that the judgment of the Tribunal is vitiated, because it is based on no evidence or that it proceeds upon conjectures, speculation or suspicion, or has been delivered after a trial contrary to rules of natural justice, the Tribunal would be under a duty to dispose of the case conformably with the opinion of the High Court and on the merits of the dispute. In all cases, however, opportunity must be afforded to the parties of being heard.”

9. That has been reaffirmed by the Supreme Court in Commissioner of Income-tax v. Jubilee Mills Ltd. It would be seen from the above decisions that, when a reference is made to the High Court under section 66, the finality attached to the decision of the Tribunal is set at large. It is only when the Tribunal disposes of the appeal afresh in conformity with the decision of the High Court, the appeal is finally disposed of; When disposing of the appeal conformably to the decision of the High Court, the Tribunal exercises its appellate powers under section 33 and the order made is also one falling under section 33(4). Therefore, all the powers of the Tribunal that could have been exercised by it at the time of the original hearing of the appeal could also be exercised while disposing of the appeal after the decision of the High Court. But the questions that could be decided are those which were in dispute before the High Court in the reference and which have to be decided in accordance with the decision of the High Court. In some cases, as in Rajkumar Mills Ltd. v. Income-tax Appellate Tribunal, even those points which were not decided on the ear lier occasion and which could not have been referred to the High Court, could be considered by the Tribunal, if they could have been considered on the earlier occasion. In regard to those questions also, the Tribunal shall have all the powers under section 33 including the power to remand. Thus, what are points that could be decided in the proceedings under section 66(5) would depend on the facts and circumstances of each case. If a question of law arises from the subsequent order made by the Tribunal, while passing an order conformably to the answer given by the High Court, a fresh reference could also be made under section 66. But the questions that could be referred are those which arise out of the order passed on the sub sequent occasion, and the questions which arise out of the earlier order could not be referred. In other words, whatever was concluded by the earlier order of the Tribunal alone could not be re-considered in the subsequent stage.

10. If we apply these principles to the instant case, there could be no doubt that the Tribunal was well within its powers in calling for a report from the Appellate Assistant Commissioner. It may be noted that, while disposing of the tax case on the earlier occasion, this court held that the transfers effected both before and after the end of the previous year were relevant on the question of the free transferability of the shares to the public. This court also observed:

“In other words, we understand by the words ‘are in fact freely transferable’ not that there should necessarily be actual transfers of shares, but a factual tendency towards free transfer of shares, subject, of course, to reasonable restrictions, by holders to other members of the public. If, for instance, the holders of shares are members of a family and the circumstances show that the company is intended to be a closed combine, this may justify an inference, in the light of those and other facts, that there is hardly any tendency either reflected from the treatment of the shares or from the composition of the shareholders towards the shares being in fact freely transferable. If there are transfers of shares to members of the public, that may be evidence of the factual transferability of shares without any unreasonable restraint or restriction.”

11. This passage shows that the High Court in fact wanted the Tribunal to go into the question of genuineness, reality or character of the transactions and whether the transfers were to the members of the public. The learned counsel for the assessee could not contend that there was any evidence on record, on which a satisfactory finding could have been given on these issues. The Tribunal was, therefore, justified in asking the Appellate Assistant Commissioner to enquire into the matter and submit a report. We do not find anything in the order justifying the contention of the learned counsel for the assessee that the Tribunal lacked jurisdiction. In the result, we answer the question referred to us in the affirmative and against the assessee with costs. Counsel's fee Rs. 250.

12. Question answered in the affirmative.