Judgment

RAMASWAMI, J. : This appeal is brought, by special leave, from the judgment of the High Court of Bombay, dated September 27, 1962 in Income-tax Reference No. 39 of 1961. The respondent-Godavari Sugar Mills Ltd.-is a Public limited company. The assessment year in this case is 1949-50. The relevant accounting year ended on May 31, 1948, The Annual General Meeting of the respondent was held on December 30, 1948. At that meeting a sum of Rs. 3,68,433 was declared as the dividend. Since the dividend fell short of the requisite percentage under S. 23A of the Income-tax (hereinafter called the Act ) the Income-tax Officer passed an order, on March 11, 1955 under the provisions of S. 23A of the Act that the undistributed portion of the assessable income of the respondent of the previous year as computed for income-tax purposes and reduced by the amount of income-tax and super tax payable by the company in respect thereof shall be deemed to have been distributed as dividend amongst the shareholders as at the date of the General Meeting. Section, 23A of the Act. as it stood at the material time. stated as follows:

"23A. Power to assess individual members of certain companies.-(1) Whe