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TMI Blog2002 (9) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... he reality after removing or piercing the veil of the company, as the circumstances of the case justify such an exercise. The purpose of the deed of compensation in reality was only to screen the payment made under that deed from liability to income-tax in the hands of the assessee. - - - - - Dated:- 25-9-2002 - Judge(s) : R. JAYASIMHA BABU., K. RAVIRAJA PANDIAN. JUDGMENT The judgment of the court was delivered by R. JAYASIMHA BABU J. -The question referred to us at the instance of the assesses is, as to whether the Tribunal was right in law in holding that the compensation of Rs. 1,00,000 received by the applicants-assessees from Sree Annapoorna Gowrishankar Hotels P. Ltd. during the previous year ended March 31, 1986, relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of so called compensation was in fact additional payment made to the four brothers by the company which they owned and controlled and which company continued to carry on the very business which had hither to been carried on by the four brothers as partners of the firm. Learned counsel for the assessees pointed out that the Tribunal has held that the company is a genuine legal entity, and that the lease between the firm and the company is also genuine. It also further held that the deed of compensation was a genuine transaction, and that the consideration for the payment made by the company to the brothers was real. Counsel also submitted that the Tribunal should not have after so holding tried to pierce the veil of the company with a vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of deciding the true character of the payment made by the company to the brothers, one must take note of the aforementioned facts Having regard to the totality of the circumstances, piercing the veil of the company was a permissible exercise which the Tribunal undertook. It is well settled that the formation of a company and registration under the Companies Act does not preclude the lifting of the veil, particularly, where matters of taxation are concerned, if the circumstances of the case so warrant. The finding that the payment made by the company to these brothers is in the nature of revenue receipt in the hands of the brothers, would not negate the separate juristic existence of the company. The company continues to remain a legal e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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