Section 23A applicability turned on the company's status in the relevant year, not later conversion or foreign incorporation.

Section 23A(1) of the Indian Income-tax Act, 1922 applied by reference to the company's status during the relevant previous year and the existence of distributable profits for that year. A later conversion from private to public company before the general meeting or before the order was passed did not prevent the provision from operating for the assessment year in question. The company's subsequent shift of registered office outside India likewise did not oust jurisdiction, because it had been an Indian company during the relevant assessment year. The challenge to the section 23A(1) order therefore failed.

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Issues: Whether an order under section 23A(1) of the Indian Income-tax Act, 1922 could be validly made where the company was a private company during the previous year but had become a public company before the general meeting and before the order was passed, and whether the company's subsequent status as a foreign company prevented application of section 23A.

Analysis: Section 23A(1) was concerned with the company's status during the relevant previous year and the existence of distributable profits for that year. The provision did not require the company to remain a private company up to the date of the general meeting or the date of the order. The later conversion into a public company did not affect the applicability of the section for the assessment year in question. Likewise, since the company had been an Indian company during the relevant assessment year, its later shift of registered office outside India did not oust jurisdiction to make the order under section 23A.

Conclusion: The reference was answered in the affirmative and the challenge to the section 23A(1) order failed.

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