TARKASASTRA-2014-MOOT-PROBLEM - Presents 3rd National Moot court Competition 2014 March 28-30 2014 IN THE HIGH COURT OF JUDICATURE AT NEW

TARKASASTRA-2014-MOOT-PROBLEM - Presents 3rd National...

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Presents 3 rd National Moot court Competition, 2014 March 28-30, 2014
IN THE HIGH COURT OF JUDICATURE AT NEW DELHI (Ordinary Original Civil Jurisdiction) IN APPEAL NO. _____ OF 2014 IN THE MATTER OF: The Income-tax Act, 1961 And IN THE MATTER OF: Section 260A of the Income-tax Act, 1961 And IN THE MATTER OF: Order by the Income-tax Appellate Tribunal, for the assessment year 2008-09. Mr. Rahul Sharma ) … Appellant Versus Director of Income Tax ) … Respondent AND Mrs. Vandana Mittal ) … Appellant Versus Director of Income Tax ) … Respondent AND M/s Henshaw & Purvis ) … Appellant Versus Director of Income Tax ) … Respondent
MEMORANDUM OF APPEAL The Appellants prefer this appeal before the Hon’ble Delhi High Court against the order passed by the Income Tax Appellate Tribunal (herein after ITAT) STATEMENT OF FACTS 1. Mark Henshaw was born in the county of Yorkshire in 1869. In 1908, he established a partnership known as Henshaw & Purvis, with Helen Purvis, a childhood friend and an expert in the then-nascent business of international finance. During their lifetime, Henshaw & Purvis was known as an astute, if conservative, lender. But its business suffered greatly after Mr. Henshaw and Ms. Purvis passed away, in 1948 and 1941 respectively. In 1969, when Henshaw & Purvis had become virtually worthless, Rahul Sharma, a gifted Indian entrepreneur who had emigrated to England in the early 60s, decided that there was a great potential in the firm, and was admitted as a partner (on injecting £500,000 as capital contribution) by the then-partners, who were descendants of Mr. Henshaw and Ms. Purvis. As is common practice, Henshaw & Purvis was registered with HMRC as a partnership firm although, of course, it is not a distinct legal entity under English partnership law. 2. Within a decade, Henshaw & Purvis’s business began to pick up and the firm, by the mid-1980s, established itself as the leading private lender in England. Mr. Sharma felt that the time was ripe to take advantage of opportunities offered by developing economies and decided to expand Henshaw & Purvis’ global reach. As a
first step, the descendants of the original partners were persuaded to retire in 1989, and replaced by three relatively young entrepreneurs handpicked by Mr. Sharma Mr. Richard Downer, a resident of the UK, Mrs. Vandana Mittal, a resident of the USA, and Mr. Edward Key, a resident of the UK. Each of them paid £10 million as capital contribution. Mr. Sharma was himself no longer a UK resident; he had become a resident of France in 1982. Although all the descendants of the original partners had left, the firm decided to retain its name in order to take advantage of the goodwill attached to it. The partnership agreement provided that any partner could freely transfer his share to any outsider, without the consent of the other partners, and that the outsider would thereupon be admitted as a full partner entitled to all the rights available to a partner under the partnership agreement. Mr. Sharma also introduced a professional management

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