Rebate eligibility despite section 23A: statutory dividends meant no valid order could be made, so rebate remained available.

A company was entitled to rebate under the Finance Act, 1955 where section 23A of the Income-tax Act, 1922 could not lawfully be applied because the statutory conditions for making an order under it were absent. The phrase "cannot be made applicable" was construed to mean denial of rebate only when the requirements for exercising section 23A power exist. As statutory dividends had been paid and no valid order under section 23A could be made, the rebate remained available.

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Issues: Whether the company was entitled to the rebate under the Finance Act, 1955 despite the applicability of section 23A of the Income-tax Act, 1922, on the ground that section 23A could not be made applicable where the statutory dividends had been paid.

Analysis: The expression "cannot be made applicable" was construed to mean that the rebate is denied only where the conditions necessary for the exercise of power under section 23A are present. The section may apply to a company in the general sense, yet it cannot be applied to that company if the preconditions for making an order under it are absent. The legislative history showed that the earlier requirement of an actual order under section 23A was altered in 1955 to avoid delay, but not to deprive a company of rebate where no order could lawfully be made. Since the assessee had paid the statutory dividend and the Income-tax Officer could not have made an order under section 23A, the rebate remained available.

Conclusion: The assessee was entitled to the rebate, and the question was answered in the affirmative, in favour of the assessee.

Ratio Decidendi: For the purpose of the rebate provision, a company to which section 23A may generally apply is nonetheless one to which that section "cannot be made applicable" if the statutory conditions for making an order under it are not satisfied.

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