- (1.) Madhowji Dharamshi Mfg. Co. Ltd. - hereinafter called 'the assessee' - was carrying on the business of manufacturing and selling textiles. The assessee was a flourishing concern; the annual profits earned by the assessee before October 1946 ranged between Rs. 15 to 20 lakhs and it had very large reserves. Till October 7, 1946, the assessee was managed by the Provident Investment Co. Ltd. which owned a majority of the shares of the assessee. On October 7, 1946 the entire share capital of the assessee was purchased by Dalmai Investment Company Ltd. and the Provident Investment Co. Ltd. resigned their office as managing agents of the assessee.
(2.) Dalmia Cement and Paper Marketing Company Ltd. hereinafter called 'the D. C. P. M.' - were incorporated on October 21, 1937 with the object, inter alia, of carrying on the business of and to work as selling agents or managing agents of any person, firm or company. By an agreement dated October 29, 1948, the D. C. P. M. were appointed selling agents of cotton goods manufactured by the assessee for a period of 10 years commencing from November 1, 1948 upon the terms and conditions mentioned in the selling agency agreement. Under the agreement it was provided that in the event of the assessee being at any time during the continuance of the agreement wound up for the purposes and with the object of transferring its business to another company, the tranferee shall appoint the D. C. P. M. and their successors and assigns to be selling agents for the residue of the term under the selling agency agreement on the same terms and conditions as otherwise. Pursuant to the agreement dated October 29, 1948, the D. C. P. M. acted as the selling agents of the assessee.
(3.) A company called "Vastra Vyavasaya Ltd." - hereinafter called "V. V." - was a private limited company incorporated on May 27, 1948 with the object, inter alia, of carrying on the business of managing agents, manager, secretaries or agents of any person, firm or company. V. V. was appointed managing agent of the assessee for 20 years with effect from July 1, 1950 under a resolution of the assessee dated July 5, 1950. A formal agreement was executed on August 30, 1950, setting out the terms and conditions of the managing agency agreement.;