(1) Section 411 of the Principal Act is amended in subsection (1) by substituting the following for paragraph (c):

"(c) In determining for the purposes of this section and the following provisions of this Chapter whether one company (in this paragraph referred to as the 'first-mentioned company') is a 75 per cent subsidiary of another company -

(i) the other company shall be treated as not being the owner of -

(I) any share capital which it owns directly in a company if a profit on a sale of the shares would be treated as a trading receipt of its trade,

(II) any share capital which it owns indirectly and which is owned directly by a company for which a profit on the sale of the shares would be a trading receipt, or

(III) any share capital which it owns directly or indirectly in a company that is not a company which, by virtue of the law of a relevant territory, is resident for the purposes of tax in such a relevant territory,

and

(ii) the first-mentioned company shall not be treated as a 75 per cent subsidiary of the other company unless -

(I) that other company, by virtue of the law of a relevant territory, is resident for the purposes of tax in such a relevant territory, or