Relationship Between Holding Companies and Subsidiaries and the Concept of Piercing the Corporate Veil in the Light of Recent Vodafone's Decision and Finance Act 2012

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Project-Corporate Law-I

Relationship Between holding Companies and subsidiaries and the concept of piercing the corporate veil in the light of recent Vodafone's decision and Finance Act 2012

Submitted to- Dr Kiran Kori Faculty-Corporate Law

Submitted by-Prarthna Baranwal Semester-V Section-A Roll No.-92

HIDAYATULLAH NATIONAL LAW UNIVERSITY, RAIPUR CHHATTISGARH

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ACKNOWLEDGEMENTS I would like to express my heartfelt gratitude to our respected faculty Kiran Kori Ma’am for giving me such a relevant and informative topic for the project and for her continuous guidance and support. My sincere thanks to my parents for their immense help and cooperation. Last but not the least my humble thanks to Almighty who continues to endow me despite all my flaws.

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TABLE OF CONTENTS       LIST OF ABBREVIATIONS………………………………………………….….03 LIST OF CASES……………………………………………………………….…..04 OBJECTIVES……………………………………………………………………...05 RESEARCH METHODOLOGY………………………………………………….05 INTRODUCTION………………………………………………………………….07 SUBSIDIARY AND HOLDING RELATIONSHIP……………………………..08          Majority’s Observations……………………………………………………08 Minority’s Observations……………………………………………………09 Piercing the Corporate Veil Income Tax Assessment………………….…14 Lifting of the Corporate Veil in Holding and Subsidiary Companies…….15 Observations regarding Lifting of Corporate Veil in Vodafone’s Case…..16

PIERCING THE CORPORATE VEIL……………………………………………14

FURTHER DEVELOPMENTS: FINANCE ACT 2012 AND DTC BILL ……….18 CONCLUSION……………………………………………………………………..19 REFERENCES……………………………………………………………………...20

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LIST OF ABBREVIATIONS 1. AC………………………………………………………..Appellate Cases 2. AIR………………………………………………………..All India Reporter 3. All ER…………………………………………………….All England Reporter 4. CFC……………………………………………………….Controlled Foreign Company 5. CIT………………………………………………………...Commissioner of Income-Tax 6. Comp. Cas…………………………………………………Company Cases 7. Comp. L.J…………………………………………………Company Law Journal 8. Del………………………………………………………….Delhi 9. DTC………………………………………………………..Direct Tax Code 10. ed.………………………………………………………….Edition 11. GAAR…………………………………………………….General Anti-Avoidance Rules 12. ITR………………………………………………………..Income Tax Reports 13. Mad………………………………………………………..Madras 14. S……………………………………………………….…..Section 15. SC………………………………………………………….Supreme Court 16. V.…………………………………………………………..Versus

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LIST OF CASES

1. Vodafone International Holdings B.V. v. Union of India, [2012] 204 Taxman 408 2. Salomon v. Salomon, [1897] AC 22 3. W.T. Ramsay Ltd. v. IRC (1982) AC 300 4. Mrs.Bacha F. Guzdar v. CIT [1955] 27 ITR 1 (SC) 5. Gramophone & Typewriter Ltd. v. Stanley (1908-10) All ER 833 6. Carew & Co. Ltd. v. Union of India [1975] 2 SCC 791 7. Carrasco Investments Ltd. v. Special Director, Enforcement Directorate[1994] 79 Comp. Cas. 631(Del). 8. Dy. Commissioner (CT) v. Cheran Transport Corpn. Ltd. [1992] 74 Comp. Cas. 563(Mad)(DB) 9. Juggilal Kamlapat v. CIT [1969] 73 ITR 702(SC) 10. Life Insurance Corpn. of India v. Escorts Ltd [1986] 59 Comp. Cases 548 11. UOI v. Bombay Tyre International Ltd [1983] 3 Comp LJ 270 12. United States v. Milwaukee Refrigerator Transit Company [1905] 142 F, edn. 247 13. Unites States v. Bestfoods 524 US 51(1988) 14. Adams v. Cape Industries Plc. [1991] 1 All ER 929 15. CIT v. Sri Meenakshi Mills Ltd. [1967] 63 ITR 609 5

OBJECTIVES

1. To discuss the concepts of holding-subsidiary companies relationship 2. To analyze the concept of lifting of the corporate veil as decided in the past cases and as considered in the latest decision in Vodafone's case. 3. To explore the effect of Finance Act 2012 and Direct Tax Code on the Concept of Lifting of Corporate Veil.

RESEARCH METHODOLOGY The research project is doctrinal and analytical in nature. It is mainly based on secondary sources. It is chiefly based on commentaries of the Vodafone case by several legal luminaries and newspaper articles. I owe my chief source of inspiration to our respected faculty.

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INTRODUCTION...
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