COMMISSIONER OF INCOME-TAX, BOMBAY CITY IBOMBAY vs JUBILEE MILLS LTD. BOMBAY

The Supreme Court held that under Section 23-A of the Income Tax Act, 1922, losses incurred prior to a company's capital reconstruction are relevant for determining the reasonableness of dividend declarations. The Court found that the Appellate Tribunal's view, which excluded these losses, was erroneous. The High Court's ruling in favor of the respondent company was upheld, affirming that the Income-tax Officer must consider all losses, including those prior to reconstruction, when assessing dividend obligations.