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Cos cant split contract to evade tax, rules ITAT
May, 08th 2008
A company cannot split a contract and execute different parts through sister concerns to evade taxes, Income Tax Appellate Tribunal has said in a ruling pertaining to an Italian company. The tribunal held that Italy-based Ansaldo Energia had split a composite contract it got from state-owned Neyveli Lignite Corp into four parts for part execution by Ansaldo Services Private (ASPL). We are of the opinion that ASPL was a facade created for the purpose of taxation, ex consequenti, its corporate veil be lifted for consolidating the four contracts, it held. Though the contracts were split into four parts, the intention of the parties was very clear that these are to be executed on the pattern of composite contract, it added.
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