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2010 (12) TMI 680 - MADRAS HIGH COURTCapital gain - transfer of business - evasion of tax or avoidance of tax - business of the assessee firm was taken over as a going concern by a limited company known as "Indo Tech Transformers Limited" by virtue of an agreement dated 15.07.1994 - The agreement between the assessee and the limited company does not make any mention about the payment received for the goodwill. The assesee was not involved in the sale of technical know-how - it is clear that in as much as the assessee firm has been taken over as a going concern, it could not have been taken over without the so-called technical know-how - It is not the case of the assessee that it has been selling the technical know-how to any other third party. The agreement also does not provide a clause to the effect that the assessee shall not indulge in the same business - . It is a well settled principle of law that what is permissible is avoidance but not evasion. When an attempt is made by a company to evade tax it is the bounden duty of the authorities to lift the corporate veil and find out the real intention behind the same. It is the duty of the Court in every case, where ingenuity is expended to avoid taxing and welfare legislations, to get behind the smoke screen and discover the true state of affairs - The Supreme Court in the case of Juggilal Kamlapat v. CIT [1968 -TMI - 5134 - SUPREME Court] held that in cases where the same persons entered into transactions though by introducing a corporate personality into some of those transactions, the income-tax authorities are entitled to pierce the veil of the corporate personality and look at the reality of the transaction - Decided against the assessee by holding that what has been done by the assessee is to evade tax and not to avoid.
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