Judgment

RAMASWAMI, J. : These appeals are brought, by special leave, from the judgment of the High Court of Madras dated January 8, 1963 in Tax Case No. 108 of 1960.

2. All the three respondents (hereinafter called the assessee-companies ) are public limited companies engaged in the manufacture and sale of yarn at Madurai. Each of the assessee-companies had a branch at Pudukottai engaged in the production and sale of cotton yarn. The sale-proceeds of the branches were periodically deposited is the branch of Madurai Bank Ltd. (hereinafter referred to as the Bank ) at Pudukottai, a former native State either in the current accounts or fixed deposits which earned interest for the various assessment years as follows:

Assessment Years Meenakshi Mills Rs. Rajendra Mills Rs. Saroja Mills Rs.

1946-47 1,08,902 . . . . . . 25,511

1947-48 1,18,791 24,953 30,620

1948-49 1,50,017 33,632 36,890

1949-50 . . . . . . . 42,369 41,393

1950-51 1,27,314 41,957 42,092

The Bank aforesaid was incorporated on February 8, 1943 with Thyagaraja Chettiar as founder Director, the Head Office being at Madurai. Out of 15 000 shares of this bank issued 14, 766 were held by Thyagaraja Chettiar, his two sons and the