COMMISSIONER OF INCOME-TAX, BOMBAY CITY I, BOMBAY versus AFCO (P) LTD., BOMBAY

Citation: [1963] SUPP. 1 S.C.R. 766 · Decided: 25-10-1962 · Supreme Court of India · Bench: J.L. KAPUR · Disposal: Dismissed

Judgment (excerpt)

1962 
, f'.V. Narasimham 
v. 
Slit• of Orino 
Subba Rao, J. 
1962 
October, 25. 
766 SUPREME COURT REPORTS [1963]SUPP. 
appeals belong to that class of cases where the High 
Court should have given definite findings on all the 
issues, 
!or that would have prevented the 
un-
necessary prolongation of this litigation and would 
have also enabled us to dispose of these appeals 
finally and more satisfactorily. But in the events 
that have happened we have no option but to set 
aside the judgment of the High Court and remand 
the said appeals to it for disposal on the other 
questions of fact and law raised therein. Costs of 
the said appeals will abide the result of the proceed-
ings in the High Court. 
Appeals Nos. 147 to 149, 152 to 154, 156 and 
157 remanded. Appeals Nos. 
150, 151 and 155 
d·ismissed. 
COMMISSIONER OF INCOME-TA\, 
BOMBAY CITY I, BOMBAY 
v. 
AFCO (P) LTD., BOMBAY 
u. L. KAPUR, M. HIDAYATULLAH and 
j. C. SHAH, JJ.) 
Income Tax-Rebate-Claim by private company for 
n·lmtc-"Claim to which the provisions of 8. 23A of the Income-
tax .. Jct cannot be 'inade applicahle"-lndian lncome-f,ax Act, 
1922 (ll of In2.~), s. 23-A-Finance Act, 1955 ( 15 of 19.55), 
8. 2, Sch. I: fJrirt I, !tern JJ. 
Fer the year of account ending March 31, 1.955, the 
appellant, a private limited company, e_a~ned a total income of 
Rs. 49,843. 
The company declared a d1V1dend of Rs. 11,712 
ou July 13, 1955, and before the close of the year of assessment 
1955-56 declared an additional dividend of Rs. 5,612, thereby 
rlistrihuting in the aggregate dividend which was not less than 
-~':
1 S.C.R. SUPREME COURT REPORTS 
767 
60% of the total income, reduced by the income-tax and super-
tax payable by it. The company then claimed rebate at the 
rate of one anna in tbe rupee on the amount computed accord-
ing to Sch. I, Part I, Item B, read with s. 2 of the Finance Act, 
1955. The Income-tax authorities rejected the claim on the 
ground that the expression "company to which the provisions 
of s. 23A of the Income-tax Act cannot be made applicable" 
in the provision of law aforesaid in the Finance Act, 1955, on 
which the appellant company relied, referred to a company 
against which in no circumstances could an order under s. 23A 
be made, and private limited companies being companies in 
respect of which an order under" 23A could be made if the 
conditions prescribed relating to distribution of dividend were 
fulfilled, the benefit of rebate was not admissible in favour of the 
appellant company. The Appellate Tribunal and the High Court 
took the view that the benefit of a rebate provided by the 
Finance Act could i10t be denied to a private company if the 
condi:iuns prescribed in s. 23A.( 1) of the Income-tax Act were 
fulfilled, brcause, according to their view, the expression "can 
not be made applicable" only refers to a state of affairs in which 
having regard to the circumstances an order under s. 23A could 
not be made. 
HeUl, that the appellant company was entitled to the 
rebate claimed by it. 
The expression "to which the provisions of s. 23A of 
the Income-tax Act can not be made applicable" in Sch. I, 
Part I, Item B, of the Finance Act, 1955, meant that the appli-
cability of s. 23A of the Income-tax Act depended upon an 
order to be made by the Income-tax Officer, and not upon any 
exclusion by the provisions of the Act. 
It was only when an 
order under s. 23A would not, having regard to the circums-
tances, be justified that the right to obtain rebate under the 
F'inance Act \\'as claimable. 
CIVIL APPELLATF: JURISDICTION : Civil Appeal 
No. 21 of :962. 
Appeal by special leave from the judgment and 
order dated September 23, 1958, of the Bombay High 
Court in LT. Reference No. 87 of 1957. 
H. N. 8anyal, Lidditi'onal 80Uc1tor-General of 
Jndfo, N. D. Iforkhnn1:8 and R. N. Sachthey, for the 
appellant. 
A. V. Viswanatha 8astri, .J.B. Dadachanji, 0. C. 
Mathur and RtJvinder Narain, for the respondent. 
1962 
comm;ssiatur of 
b1co1111·'4x, Bomba,. 
City I, Bombay 
v. 
Afto (Pl Lid., 
Bl)mba,1 
1962 
Commis:;ioner of 
Income~tax, Bomba~ 
City I, Bombay 
v. 
Afco (P) Ltd., 
Bombay 
Shah, J. 
i68 SUPREME COURT .REPORTS [1963] SUPP. 
19fl2. 
October 25. 
The judgment of the 
Court was delivered by 
SHAH, J.-For the year of account ending 
March 31, 1955, Afco Private Ltd.-a private limited 
company-earned a total income which was finally 
computed in assessment proceedings by order of the 
Income-tax Tribunal, at Rs. 49,84:3

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