Actual assessed tax governs section 23A commercial profits; later appellate reduction cannot rewrite the distributable surplus calculation.

For section 23A(1) computations, commercial profits and distributable surplus must be determined by deducting the tax actually assessed when the order is made, if the assessment had already been completed; a later reduction in quantum appeal does not alter that calculation. The assessment then in force governs the Income-tax Officer's working, and actual assessed tax, not estimated tax, is the proper deduction in such cases. The burden remains on the Income-tax Officer to establish larger commercial profits available for distribution, and the assessment order alone is not conclusive.

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Issues: Whether, for computing commercial profits and distributable surplus under section 23A(1) of the Indian Income-tax Act, 1922, the tax actually assessed by the Income-tax Officer at the time of the order had to be deducted rather than the reduced tax later determined in the quantum appeal, and whether the order under section 23A(1) was valid.

Analysis: The commercial profits of a company, for the purpose of section 23A(1), are to be worked out by deducting the tax that was actually assessed when the section 23A order was made, if the assessment had already been completed. The later reduction of tax in the quantum appeal could not be imported into the section 23A computation because the Income-tax Officer acted on the basis of the assessment then in force. The Court followed the principle that actual assessed tax, and not estimated tax, is the proper deduction where assessment has already been completed. It was also noted that the burden lay on the Income-tax Officer to establish that the company had larger commercial profits available for distribution, and the assessment order by itself was not conclusive for that purpose.

Conclusion: The Tribunal was right in holding that the tax actually levied by the Income-tax Officer had to be taken into account and that the order under section 23A(1) was not valid and proper.

Ratio Decidendi: For section 23A(1) proceedings, where income-tax has already been assessed before the order is made, the actual assessed tax must be deducted in computing commercial profits and distributable surplus; a later appellate reduction of tax does not govern that computation.

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