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What is Applicability of General Anti-Avoidance Rule? What is Impermissible avoidance arrangement? Section 95 and 96 of Income Tax Act 1961

Applicability of General Anti-Avoidance and Rule Impermissible avoidance arrangement are defined under section 95 and 96 of Income Tax Act 1961. Provisions under these Sections are :

Section 95 of Income Tax Act "Applicability of General Anti-Avoidance Rule"

Section 95. [(1)] Notwithstanding anything contained in the Act, an arrange- ment entered into by an assessee may be declared to be an impermissible avoidance arrangement and the consequence in relation to tax arising therefrom may be determined subject to the provisions of this Chapter.

[(2) This Chapter shall apply in respect of any assessment year beginning on or after the 1st day of April, 2018.]
Explanation.-For the removal of doubts, it is hereby declared that the provisions of this Chapter may be applied to any step in, or a part of, the arrangement as they are applicable to the arrangement.

 

Section 96 of Income Tax Act "Impermissible avoidance arrangement"

Section 96. (1) An impermissible avoidance arrangement means an arrangement, the main purpose of which is to obtain a tax benefit, and it-

(a) creates rights, or obligations, which are not ordinarily created between persons dealing at arm's length;

(b) results, directly or indirectly, in the misuse, or abuse, of the provisions of this Act;
(c) lacks commercial substance or is deemed to lack commercial substance under section 97, in whole or in part; or

(d) is entered into, or carried out, by means, or in a manner, which are not ordinarily employed for bona fide purposes.

(2) An arrangement shall be presumed, unless it is proved to the contrary by the assessee, to have been entered into, or carried out, for the main purpose of obtaining a tax benefit, if the main purpose of a step in, or a part of, the arrangement is to obtain a tax benefit, notwithstanding the fact that the main purpose of the whole arrangement is not to obtain a tax benefit.

   
 

Income Tax Act 1961

What is Avoidance of tax by certain transactions in securities? Section 94 of Income Tax Act 1961

What is Special measures in respect of transactions with persons located in notified jurisdictional area? Section 94A of Income Tax Act 1961

What is Applicability of General Anti-Avoidance Rule? What is Impermissible avoidance arrangement? Section 95 and 96 of Income Tax Act 1961

What is Arrangement to lack commercial substance? What is Consequences of impermissible avoidance arrangement? Section 97 and 98 of Income Tax Act 1961

What is Treatment of connected person and accommodating party? Application of this Chapter What is Framing of guidelines? Section 99, 100 and 101 of Income Tax Act 1961

What are the Definitions? Section 102 of Income Tax Act 1961

What is Determination of tax where total income includes income on which no tax is payable? What is Tax on accumulated balance of recognised provident fund? Section 110 and 111 of Income Tax Act 1961

What is Tax on short-term capital gains in certain cases? Section 111A of Income Tax Act 1961

What is Tax on long-term capital gains? Section 112 of Income Tax Act 1961

 

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