AIA Engineering Ltd Vs. Add CIT (ITAT Ahmedabad)– It was held that investment made by AIA Engineering Limited (AIA India or the assessee) in Vega Industries (Middle East) FZE (Vega UAE) shall not be treated as investment in a proprietary concern of AIA India though Vega UAE had no other shareholder.Vega UAE is considered to be established as an independent corporate entity with separate financial liability from those of its owner in accordance with the memorandum of incorporation and the only situation where the owner will be treated as personally responsible is regarding the omission of some specified information.
While Article 151 of the UAE constitution provides for supremacy of the Constitution, it recognises an exception to the laws of the Emirates for matters relating to Article 121. Accordingly, the legislation framed by the Emirates of Ajman does not appear to be in conflict with the constitution of UAE and a company formed as a FZE in Ajman, complying with respective laws, is an incorporated entity.Since Vega UAE is incorporated as a body corporate under the law of a country outside India which is a requirement of section 2(17) of the Act, Vega UAE has to be accepted as a company within the definition of section 2(17) of the Act. Thus, Vega UAE is not a sole proprietorship concern of the assessee.
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