In the case of British-American Tobacco Co., Ltd. v. Helvering, Commissioner of Internal Revenue (1934), the U.S Supreme Court ruled in favor of the respondent, Guy T. Helvering who was then serving as Commissioner for Internal Revenue. The dispute arose when British-American Tobacco Company claimed that they were exempt from paying taxes on dividends received from American subsidiary companies under Section 233(a)(1) and (2) of the Revenue Act 1928 because they were a foreign corporation with no office or place of business in America during that taxable year. However, it was found that their claim did not meet all conditions necessary to qualify for such exemption according to these sections' provisions which required them to be "not engaged in trade or business within" America at any time during said taxable year; hence, their appeal failed before both lower courts and finally before Supreme Court too.

In the dissenting opinion for the British-American Tobacco Co., Ltd. v. Helvering case, it was argued that the majority's interpretation of "carrying on business" in relation to foreign corporations and their domestic subsidiaries was too broad. The dissent contended that a parent company should not be considered as conducting business merely because its subsidiary does so within U.S borders. They believed this view disregarded corporate separateness and could lead to double taxation issues, which would contradict international tax principles aimed at avoiding such problems. Furthermore, they disagreed with the majority's assertion that dividends received by British-American from its American subsidiary constituted income derived from carrying on a trade or business in America under Section 217(a) of Revenue Act 1921.