The document discusses the concept of separate legal personality as a characteristic of a company. It summarizes a court case where shareholders transferred property to the company they worked for in order to avoid paying taxes, arguing the company was a separate legal entity. However, the court ruled the transfer was from the shareholders to themselves under the company name, as they were the principal shareholders. Ultimately, the document concludes that unlike a partnership, a company is considered a separate legal person under law, distinct from its members, and the property transferred in this case solely belonged to the company.
The document discusses the concept of separate legal personality as a characteristic of a company. It summarizes a court case where shareholders transferred property to the company they worked for in order to avoid paying taxes, arguing the company was a separate legal entity. However, the court ruled the transfer was from the shareholders to themselves under the company name, as they were the principal shareholders. Ultimately, the document concludes that unlike a partnership, a company is considered a separate legal person under law, distinct from its members, and the property transferred in this case solely belonged to the company.
The document discusses the concept of separate legal personality as a characteristic of a company. It summarizes a court case where shareholders transferred property to the company they worked for in order to avoid paying taxes, arguing the company was a separate legal entity. However, the court ruled the transfer was from the shareholders to themselves under the company name, as they were the principal shareholders. Ultimately, the document concludes that unlike a partnership, a company is considered a separate legal person under law, distinct from its members, and the property transferred in this case solely belonged to the company.
The document discusses the concept of separate legal personality as a characteristic of a company. It summarizes a court case where shareholders transferred property to the company they worked for in order to avoid paying taxes, arguing the company was a separate legal entity. However, the court ruled the transfer was from the shareholders to themselves under the company name, as they were the principal shareholders. Ultimately, the document concludes that unlike a partnership, a company is considered a separate legal person under law, distinct from its members, and the property transferred in this case solely belonged to the company.
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Topic : SEPERATE LEGAL PERSONALITY AS A
CAHARACTERSTIC OF A COMPANY
Name : ADITI SHUKLA
Roll.no : 1683004
Section : BA.LLB(A) SEPERATE LEGAL PERSONALITY AS A CHARACTERSTIC OF THE COMPANY
The concept of separate legal entity is several years old and it means that the corporation is separate in all spheres of its activities. It is separate from its owner, its employees and due to this separation between corporation and an individual the shareholders’ liability is also limited. The corporation can own, sell and buy property on its own name. The corporation is a distinct legal persona existing independent of its members. It can sue and can be sued by the court of law as a legal person.
KANDOLI TEA CO. LTD, RE1
Facts; Certain persons working in Kandoli Tea Company transferred their properties in the name of the Tea Company with intent to avoid paying in ad valorem duty on the transferred property as the tax was due on that property. Petition was moved to the court of law where they were claiming exemption from the payment of tax on the ground that they did not have any taxable property on their name because the same was transferred to the Kandoli Tea Company’s name.
Judgement; The decision in this matter was ; “That it was nothing but a transfer from them in one to themselves under another name as they were the shareholders in the company.”2 Rejecting the above view, the court decided that the company was a separate person, a separate body altogether from the shareholders and the transfer was as much a conveyance, a transfer of the property, as if the shareholders had been totally different persons.
Conclusion; Partnership has no existence apart from its members.It is nothing but a collection of the partners.3Unlike partnership, a company, on the other hand , is in law a person. By incorporation unde the Act, the company is vested with a corporate personality which 1 ILR (1886) 13 CAL 43 2 Calcutta High Court’s observation in Kandoli Tea Co Ltd,re, 3 Basic difference between a company and a partnership explained by GHULAM HASAN J in Bacha F Guzdar v CIT, AIR 1955 SC 74: (1995) 25 Comp Cas 1. is distinct from the members belongs who compose it. Immediately after the incorporation the company acts as an incorporated individual. The property which has been transferred in this case by the shareholders in the name of the company solely belongs to the company.The liabilities which arise from the transferred property will lie on the company and the former owner is under no liability, although , as a principal shareholder, he is able to take full advantage of profits which the company makes.4 In the above case the persons working in the Company were also the shareholders of the company who entered into a contract with the company.After the completion of the contract the above taxable property owned by the company and the company is not liable to pay the due tax on that property.
4 PALMER’S PRIVATE COMPANIES (42nd Edn 1961) 13. BIBLIOGRAPHY Companies Act,2013 Bare act Company Law Manual 7th Edition May 2017 Taxmann’s Company Law 16th Edition Avtar Singh Eastern Book Company https://www.researchgate.net/publication/291425524_Separate_Legal_ Entity_of_Corporation_The_Corporate_Veil
