GAAR threshold for share transactions requires independent material beyond timing; stock exchange dealings may fall outside Section 96.

GAAR under Section 96 applies only where an arrangement between two or more parties has specified avoidance attributes, such as non-arm's length rights, misuse or abuse of the Act, lack of commercial substance, or means not ordinarily used for bona fide purposes. The article notes that share transactions were carried out through stock exchange and DMAT accounts, the Department did not establish a nexus with known persons or material beyond timing, and the assessee's investment portfolio and return filings supported a bona fide investment pattern. On that basis, the presumption under Section 96(2) was not independently substantiated, and the reported conclusion is that the transactions did not amount to an impermissible avoidance arrangement.

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Issues: Whether the purchase and sale of shares through stock exchange transactions, resulting in set-off of short-term capital loss against long-term capital gains, constituted an impermissible avoidance arrangement attracting the General Anti-Avoidance Rule under Section 96 of the Income-tax Act, 1961, and justified the order passed under Section 144BA(6) of the Income-tax Act, 1961.

Analysis: The statutory scheme of Section 96 requires an arrangement between two or more parties, coupled with the existence of one or more of the specified attributes, namely creation of non-arm's length rights or obligations, misuse or abuse of the Act, lack of commercial substance, or employment of means not ordinarily used for bona fide purposes. The material before the Court showed that the transactions were undertaken through stock exchange and DMAT account, the Department had not established any nexus with known persons or any cogent material beyond the timing of purchase and sale, and the assessee had an established investment portfolio with all transactions reflected in the return filings. The presumption under Section 96(2) was not sufficiently supported by independent material to bring the transactions within the mischief of GAAR.

Conclusion: The transactions did not constitute an impermissible avoidance arrangement, and the order passed under Section 144BA(6) could not be sustained.

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