MAZAGAON DOCK LTD. vs THE COMMISSIONER OF INCOME-TAX AND EXCESS PROFITS TAX

The Supreme Court interpreted Section 42(2) of the Indian Income-tax Act, 1922, clarifying that the business subject to taxation is that of the resident, not the non-resident. It held that a resident company can be deemed to have carried on business with a non-resident if the dealings are organized and concerted, even if no profits are derived by the non-resident. The Court upheld the Income-tax Officer's assessment on the appellant company, affirming that the non-resident companies engaged in business with the appellant under a special agreement for repairs at cost.