(1.) ICI (India) Pvt. Ltd., the respondent in this appeal, is an Indian company and is assessed to income-tax in India as an ordinary resident.
(2.) IMPERIAL Chemical Industries Ltd., London (hereafter referred to as "ICI"), is a company incorporated under the laws of the United Kingdom and is a non-resident company within the meaning of the IT Act, 1961. At the material time, ICI (India) Pvt. Ltd. was a 100 per cent subsidiary of ICI.
(3.) IT was open to ICI to subscribe for and hold directly the shares of the said three manufacturing companies, viz., ACCI, IEL and ATIC. But ICI decided to hold such shares initially through and in the name of the respondent for the following reasons : (a) Tax reliefs were available for new industrial undertakings under ss. l5C and 56A of the Indian IT Act, 1922. (b) If ICI held the shares directly, the reliefs under the said sections would be nullified as the dividends on which relief could be obtained in India would be fully taxed in the U.K. (c) The procedure would also be administratively convenient.