COMMISSIONER OF INCOME-TAX, BOMBAY CITY-1 vs GODAVARI SUGAR MILLS LTD.

The Supreme Court held that the Income-tax Officer lacked the authority to issue an order under Section 23A of the Income-tax Act, 1922, as the Public Companies (Limitation of Dividends) Ordinance, 1948 was in effect at the time of the annual general meeting. The Court clarified that the order under Section 23A could only be made if a higher dividend could have been lawfully declared at that time. Consequently, the High Court's decision in favor of the respondent was upheld, confirming that the repeal of the Ordinance did not retroactively affect the legality of the dividend declaration.