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Issues: Whether Explanation II to Paragraph D of Part II of the First Schedule to the Finance (No. 2) Act, 1962, lays down an exhaustive definition of "subsidiary company" for the purpose of super-tax rebate, or merely creates a deeming fiction so that the broader meaning under the Companies Act, 1956, including indirect holding, continues to apply.
Analysis: The Explanation was held to operate as a complete definition for the Finance Act provisions concerned. The use of the words "deemed to be" did not convert it into a mere fiction to be read in aid of the Companies Act definition. The statutory setting, the placement of the Explanation, and the scheme of the Finance Act showed that the rebate depended on the specific meaning supplied by the Finance Act itself. That meaning required the assessee-company to hold more than half in nominal value of the equity share capital directly, and indirect or aggregated holding through subsidiaries could not be imported into the Explanation. The definition in the Companies Act, 1956, therefore could not control the rebate provision in the Finance Act.
Conclusion: The higher rebate was not admissible on the dividends received from the two companies, because they were not subsidiaries within the meaning of Explanation II as applied to the Finance Act provisions.
Ratio Decidendi: Where a fiscal statute supplies its own definition for a benefit provision, that definition is exhaustive for that provision and must be applied on its own terms, without importing a broader definition from another enactment or treating indirect holding as equivalent to direct statutory holding unless the text so provides.
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