The question (6 marks)
A foreign group holds its Indian operating business through a company incorporated outside India. The revenue authorities say the holding company was interposed only to save tax and should be disregarded. The group answers that it has held the structure for many years, has run a real business in India throughout and has paid tax on Indian profits. Advise the parties on the approach a court would take, and on the statutory rule that now applies. (6 marks)
MU Module I, tax evasion, tax avoidance and tax planning; pack ch. 01, problem question.
Plan your answer on paper before you look at the authorities — issue first, then the rule, then apply it to these facts.
It tests Unit 1 · Foundations of Indian Tax Law of Law of Taxation.
Authorities you will need
- Vodafone International Holdings B.V. v. Union of India
- McDowell and Company Ltd. v. CTO
- Commissioners of Inland Revenue v. Duke of Westminster
- W.T. Ramsay Ltd. v. Inland Revenue Commissioners
- Craven v. White
- Sections 178 to 180 and 274, Chapter XI, Income-tax Act
How an answer is marked
A full-marks answer names the issue in one line, states the rule with its section, cites the authority, applies it to these facts and concludes — in that order. The app's model answer for this question is written in exactly that shape, with a checklist to mark your own attempt against.