โก๏ธ CA Foundation LAW Important Case study @CA_FOUNDATION2
โฆ๏ธ Question:
A, an assessee, had large income in the form of dividend and interest. In order to reduce his tax
liability, he formed four private limited company and transferred his investments to them in
exchange of their shares. The income earned by the companies was taken back by him as pretended loan. Can A be regarded as separate from the private limited company he formed?
โ๏ธ Provisions:
1. The House of Lords in Salomon Vs Salomon & Co. Ltd. laid down that a company is a person distinct and separate from its members, and therefore, has an independent separate legal existence from its members who have constituted the company.
2. But under certain circumstances the separate entity of the company may be ignored by the courts.When that happens, the courts ignore the corporate entity of the company and look behind the corporate faรงade and hold the persons in control of the management of its affairs liable for the acts of the company.
3. Where a company is incorporated and formed by certain persons only for the purpose of evading taxes, the courts have discretion to disregard the corporate entity and tax the income in the hands
of the appropriate assesse.
4. In Dinshaw Maneckjee Petit case it was held that the company was not a genuine company at all
but merely the assessee himself disguised that the legal entity of a limited company. The assessee
earned huge income by way of dividends and interest. So, he opened some companies and
purchased their shares in exchange of his income by way of dividend and interest. This income
was transferred back to assessee by way of loan. The court decided that the private companies
were a sham and the corporate veil was lifted to decide the real owner of the income.
๐น Fact of case:
In the instant case, the four private limited companies were formed by A, the assesse, purely and simply as a means of avoiding tax and the companies were nothing more than the faรงade of the assesse himself. Therefore, the whole idea of Mr. A was simply to split his income into four parts with a view to evade tax. No other business was done by the company
โช๏ธAnswer:
Hence, A cannot be regarded as separate from the private limited companies he formed
โฆ๏ธ Question:
A, an assessee, had large income in the form of dividend and interest. In order to reduce his tax
liability, he formed four private limited company and transferred his investments to them in
exchange of their shares. The income earned by the companies was taken back by him as pretended loan. Can A be regarded as separate from the private limited company he formed?
โ๏ธ Provisions:
1. The House of Lords in Salomon Vs Salomon & Co. Ltd. laid down that a company is a person distinct and separate from its members, and therefore, has an independent separate legal existence from its members who have constituted the company.
2. But under certain circumstances the separate entity of the company may be ignored by the courts.When that happens, the courts ignore the corporate entity of the company and look behind the corporate faรงade and hold the persons in control of the management of its affairs liable for the acts of the company.
3. Where a company is incorporated and formed by certain persons only for the purpose of evading taxes, the courts have discretion to disregard the corporate entity and tax the income in the hands
of the appropriate assesse.
4. In Dinshaw Maneckjee Petit case it was held that the company was not a genuine company at all
but merely the assessee himself disguised that the legal entity of a limited company. The assessee
earned huge income by way of dividends and interest. So, he opened some companies and
purchased their shares in exchange of his income by way of dividend and interest. This income
was transferred back to assessee by way of loan. The court decided that the private companies
were a sham and the corporate veil was lifted to decide the real owner of the income.
๐น Fact of case:
In the instant case, the four private limited companies were formed by A, the assesse, purely and simply as a means of avoiding tax and the companies were nothing more than the faรงade of the assesse himself. Therefore, the whole idea of Mr. A was simply to split his income into four parts with a view to evade tax. No other business was done by the company
โช๏ธAnswer:
Hence, A cannot be regarded as separate from the private limited companies he formed
๐3
๐ Economics Quiz
Which of the following is one of the most significant macro policy indicators that impact business?
Which of the following is one of the most significant macro policy indicators that impact business?
Anonymous Quiz
22%
(a) Trade policy
30%
(b) International trade
43%
(c) Tax rates
5%
(d) Rural policy
๐ Economics Quiz
Where is the Indiaโs only port-led multi-product SEZ?
Where is the Indiaโs only port-led multi-product SEZ?
Anonymous Quiz
15%
(a) Kochi
36%
(b) Mumbai
8%
(c) Surat
41%
(d) Mundra
๐ Economics Quiz
A strategic response where businesses are very passive in their behaviour is called as -
A strategic response where businesses are very passive in their behaviour is called as -
Anonymous Quiz
33%
(a) Least resistance
15%
(b) Proceed with caution
34%
(c) Dynamic response
18%
(d) Strategic action
๐ Economics Quiz
Which of the following is NOT a feature of Private company?
Which of the following is NOT a feature of Private company?
Anonymous Quiz
66%
(a) There are no restrictions on transfer of shares.
11%
(b) Minimum number of directors are 2.
15%
(c) Private companies are exempted from deputing
8%
(d) It can start business
๐ Economics Quiz
The exchange rate of a country is-
The exchange rate of a country is-
Anonymous Quiz
79%
(a) No. of units of a given currency that can be purchased for one unit.
8%
(b) Equity shares exchanged for bonus shares.
6%
(c) Dividend paid out of profits.
7%
(d) Current ratio
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๐ Economics Quiz
Which of the following is not a characteristic of monopolistic competition?
Which of the following is not a characteristic of monopolistic competition?
Anonymous Quiz
16%
(a) Ease of entry into the industry
18%
(b) Product differentiation
50%
(c) A homogeneous Product
16%
(d) A relatively large number of sellers
๐ Economics Quiz
Stock Exchange is an example of __
Stock Exchange is an example of __
Anonymous Quiz
11%
(a) Forward market
72%
(b) Regulated market
16%
(c) Spot market
1%
(d) None of these
๐ Economics Quiz
Total Utility is maximum when:
Total Utility is maximum when:
Anonymous Quiz
12%
(a) Marginal Utility is negative
67%
(b) Marginal Utility is zero
18%
(c) Marginal Utility is at its highest point.
4%
(d) None of these
๐ Economics Quiz
Which is the feature of monopolistic Competition:
Which is the feature of monopolistic Competition:
Anonymous Quiz
12%
(a) Large number of sellers
15%
(b) Product differentiation
5%
(c) Freedom of entry and exit
68%
(d) All of the above
๐ Economics Quiz
Which is not the External Causes of business cycle:
Which is not the External Causes of business cycle:
Anonymous Quiz
17%
(a) Technology shock
28%
(b) Population Growth
38%
(c) Money Supply
17%
(d) Technology Shock
๐ Economics Quiz
Consumer under Income effect:
Consumer under Income effect:
Anonymous Quiz
35%
(a) Always purchase higher quantities of both the commodities
34%
(b) moves to higher or lower indifference curve
25%
(c) moves along the original indifference Curve.
5%
(d) None of these
Forwarded from ACHIEVERS_COMMERCE_ CLASSES {@Ca foundation2 }
12Days Master Revision Study Plan For CA Foundation Students.pdf
1.4 MB
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Law & Bcr (1.5 Day) Strategy.pdf
350.5 KB
๐น๏ธ Law & Bcr (1.5 Day) Strategy.pdf
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๐ฅ4
๐ Economics Quiz
Business Economics is a :
Business Economics is a :
Anonymous Quiz
18%
(a) Normative Science
4%
(b) Interdisciplinary
7%
(c) Pragmatic
71%
(d) All of these
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