Introduction

Abstract

Traditionally, legal systems have given priority to contracts in determining the tax consequences for taxpayers. There have been moves within legal systems to look at the overall commercial effect of all contracts that parties enter into rather than look at each contract in isolation, but even with such approaches, the sanctity of contracts is maintained; the only difference is that the contracts relevant to a particular controversy are looked at holistically. Therefore, until recently, contract continued to trump status, with any exceptions only going to emphasize the primacy of contracts. The Indian government, through its recent legislative interventions, has tried to reverse this primacy of contract over status.