MIS. BHOR INDUSTRIES LTD. vs THE COMMISSIONER OF INCOME-TAX,BOMBAY CITY I.(and connecte

The Supreme Court held that the provisions of the Indian Income-tax Act, 1922, specifically Section 23A, could not be applied to profits and gains of previous years ending before August 1, 1949, as per Paragraph 12 of the Merged States (Taxation Concessions) Order, 1949. The Court ruled that the Income-tax Officer erred in not deducting interest under Section 18A(8) while computing deemed dividends. The appeal was allowed, and the assessment made by the Income-tax Officer was set aside, affirming the shareholders' claims for exemption from taxation on deemed dividends.