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

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

1

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.

2

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

3

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.

References: ARTICLES 1. Amit Sachdeva, Can the Proposed Tax Code override Indian Tax Treaties, Tax Notes Int’l, February 1, 2010, p. 451. 2. D. Goddard, "Corporate Personality--Limited Recourse and Its Limits" in R. Grantham et al. (eds), Corporate Personality in the 20th Century (Oxford,1998), pp.11-64 at p.11. 3. Dindayal Dhandaria, Vodafone’s Case, No Capital Punishment for Capital Investment, [2012] 18 taxmann.com 375. 4. R.P. Garg, Ironing out the silken Creases of Vodafone, [2012] 18 taxmann.com 99. 5. Rajesh Gosain, Vodafone gets a successful Spectrum in Tax Department, [2012] 18 taxmann.com 121. 6. Rishikesh Gagan Vyas, The Great Vodafone Saga, [2012] 19 taxmann.com 321 . 7. S. Rajaratnam, Vodafone’s case: A Welcome Decision, [2012] 18 taxmann.com 100. 8. Vinod Kothari & Soma Bogaria, Analytical Articles on Budget 2012,VKHL 2012. BOOKS 1. A.K. MAJUMDAR & G.K. KAPOOR, TAXMANN’S COMPANY LAW (14th ed. 2012) 2. AVATAR SINGH, COMPANY LAW (15th ed. 2009) 3. C.R. DATTA, COMPANY LAW (6th ed. 2008) 4. PALMER, COMPANY LAW (24th ed. 1987) DICTIONARY BRAYAN A GARNER, BLACK’S LAW DICTIONARY (6th ed. 2010). 22