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Policy Vs Prejudice by Mr.N.Venkataraman
Policy Vs Prejudice by Mr.N.Venkataraman
Policy Vs Prejudice by Mr.N.Venkataraman
Policy Vs Prejudice by Mr.N.Venkataraman
Policy Vs Prejudice by Mr.N.Venkataraman
Policy Vs Prejudice by Mr.N.Venkataraman
Policy Vs Prejudice by Mr.N.Venkataraman
Policy Vs Prejudice by Mr.N.Venkataraman
Policy Vs Prejudice by Mr.N.Venkataraman
Policy Vs Prejudice by Mr.N.Venkataraman
Policy Vs Prejudice by Mr.N.Venkataraman
Policy Vs Prejudice by Mr.N.Venkataraman
Policy Vs Prejudice by Mr.N.Venkataraman
Policy Vs Prejudice by Mr.N.Venkataraman
Policy Vs Prejudice by Mr.N.Venkataraman
Policy Vs Prejudice by Mr.N.Venkataraman
Policy Vs Prejudice by Mr.N.Venkataraman
Policy Vs Prejudice by Mr.N.Venkataraman
Policy Vs Prejudice by Mr.N.Venkataraman
Policy Vs Prejudice by Mr.N.Venkataraman
Policy Vs Prejudice by Mr.N.Venkataraman
Policy Vs Prejudice by Mr.N.Venkataraman
Policy Vs Prejudice by Mr.N.Venkataraman
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Policy Vs Prejudice by Mr.N.Venkataraman

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  • 1. Policy vs Jurisprudence N.Venkataraman Senior Advocate
  • 2. Broad Holding Structure HTIL- Hongkong HTICHIL- Amber International-Netherlands HTI(BVI) Holding Ltd. CGP Investments-Cayman Islands Array.-Holdings- Mauritius CGP India Investment Ltd- Mauritius Series of Entities in Mauritius HEL India
  • 3. Contracting Parties HTIL-Hongkong-Seller of shares VIH(BV)-Netherlands-Buyer of shares Shares sold-not the shares of HTIL, Hongkong but shares in the Cayman Island entity
  • 4. Cayman Islands Entity Company established under the laws of CI Prohibited from carrying any operations or functions Registered office situated in CI Company merely holding shares for smooth transition No other business activity
  • 5. Transactions-Possibilities- Net effect
  • 6.  Purchase of HEL Shares in India- Liable to Capital Gains tax Purchase of shares of the Mauritius companies- Protected by India-Mauritius treaty-no capital gains tax Purchase of Cayman Island shares-not protected by any treaty Net Effect- controlling interest in HEL India and the Indian business market
  • 7. Court evolved Doctrines Piercing the Corporate Veil Substance over form Beneficial Ownership Alter Ego
  • 8. Test-Strategic ForeignDirect Investment
  • 9.  Investment coming to India as an Investment destination Duration of time of the Holding structure Period of business operations in India Generation of taxable revenues in India Timing of Exit Continuity business on exitStrategic FDI considered to be genuine and not asham
  • 10. Sham Transactions Structure used for circular trading Round tripping To pay bribes (Entities to be discarded by applying the test of Fiscal nullity)
  • 11. Look At vs Look Through Look At- Direct- Transaction under question Look Through-Transaction „in consequence of‟ Section 9 – Transfer, existence of Capital Asset and situation of such asset in India Expression „Directly or Indirectly‟ go with the income and not with the transfer of Capital Asset Indirect transfers not governed by Section 9- Absence of Look Through test
  • 12. Doctrines vs Look Through When there are Court evolved doctrines i.e. piercing the Corporate Veil, substance over form, do we need a statutory provision in the form of “ Look Through” ?
  • 13. Westminster Doctrine “Given that a document or transaction is genuine, court cannot go behind it to some supposed underline substance” Doctrine of series of Transaction“If a transaction from the beginning to the end isfound to be genuine holistically, intermittent stepscannot be examined to find out whether the stepsare genuine or a sham”
  • 14. Application of the Test Judgment applies the test commencing from the Hong kong shares upto the Indian shares Finds holistically a genuine transaction Sale of Cayman Island shares therefore should not be examined independently in the series of transaction Mere holding of shares for smooth transition in Cayman Islands by itself is a genuine business
  • 15. Application of the Test Applicability of the Doctrine-if Hongkong shares are sold Doctrine whether applicable for sale of Cayman Island shares?
  • 16. Share vs Asset Sale of Share vs Sale of Asset Conceptual difference between pre ordained transactions created for tax avoidance and a transaction which evidences investment to participate If investment terminates into genuine reasons, can avoidance of tax also be held genuine (FDI vs Indian scenario)
  • 17. Transaction vs Effect A transaction can be taxed and not its effect Piercing Corporate Veil?
  • 18. Situs of Shares and Valuation
  • 19.  Would be where the company is incorporated and where its shares can be transferred Clear cut straight forward share sale and not Asset sale Valuation cannot be the basis for taxation especially in the case of Capital Gains Valuation maybe a science but not law Valuation is a matter of opinion
  • 20.  CGP was treated in the Hutchison structure as an investment vehicle. When shares are sold lock stock and barrel transactions cannot be broken up to identify the underlying assets Merely because there is no capital gains tax at the time of exit would not make a share sale (investment) a sham or a tax avoidant
  • 21. Section 195 Decision of the third judge Will NRI transactions go out of the purview of section 195? Whether the judgment of the learned third judge constitute a binding precedent
  • 22. Policy vs Jurisprudence A policy in place- Court normally do not interfere unless contrary to public interest When a policy is not in place as in the case of India- Mauritius treaty can court create policy using judicial tool of interpretation ?
  • 23. Consequences WillGovernment go for retrospective amendment- consequences thereof? Will PIL be filed demanding retrospective amendment? Whether the judgment is amenable to judicial review and reference to Constitution Bench?

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