JUDGMENT

Syed Shah Mohammed Quadri, J.-The judgment and order passed by the Division Bench of the High Court of Madras in T.C. Nos. 1224 and 1225 of 1977 dated January 17, 1983 is subject-matter of challenge in these appeals.

2. The appellant-assessee is a company registered under the Indian Companies Act. It was incorporated in the year 1965. Two companies M/s. Eimco Corporation Inc. (for short Eimco"), an American company, and M/s. K.C.P. Ltd. (for short KCP ), an Indian Company, promoted the appellant company. The authorised capital of the appellant was Rs. 10,000,000 consisting of 1,000,00 equity shares of Rs.10/- each. Each of them agreed to subscribe Rs. 4,70,000/- out of which each will have to pay initially a sum of Rs. 2,80,000/- towards its contribution. Towards its share Eimco contributed technical know-how consisting of right and license to manufacture existing Eimco Sedimentation and filtration equipment, along with the supply of and/or the agreement to supply general technical data including manufacturing drawings in the form as used and possessed by Eimco, relating to the sales, application, selection, material requirements, manufacture, installation and operation of