Commercial substance under GAAR turns on round trip financing, accommodating parties, offsetting elements, and disguised fund movements.

An arrangement is deemed to lack commercial substance if it satisfies any one of four independent tests: round trip financing, use of an accommodating party, offsetting or cancelling elements, or a transaction that disguises the value, location, source, ownership or control of funds. Round trip financing covers series of transactions in which funds are transferred among parties mainly to obtain a tax benefit, without regard to traceability, sequence, or mode of transfer. An accommodating party is one whose participation is mainly to secure a tax benefit for the assessee, whether or not connected. The term arrangement is defined broadly to cover any step in a transaction, operation, scheme, agreement or understanding.

---

---

---