TaxTMI 
TaxTMI 
Insertion of new Chapter X-A.
X X X X Extracts X X X X
X X X X Extracts X X X X
....lied to any step in, or a part of, the arrangement as they are applicable to the arrangement. Impermissible avoidance arrangement. 96. (1) An impermissible avoidance arrangement means an arrangement, the main purpose or one of the main purposes 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 a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....fit (but for the provisions of this Chapter) for a party. (2) For the purposes of sub-section (1), round trip financing includes any arrangement in which, through a series of transactions-- (a) funds are transferred among the parties to the arrangement; and (b) such transactions do not have any substantial commercial purpose other than obtaining the tax benefit (but for the provisions of this Chapter), without having any regard to-- (A) whether or not the funds involved in the round trip financing can be traced to any funds transferred to, or received by, any party in connection with the arrangement; (B) the time, or sequence, in which the funds involved in the round trip financing are transferred or received; or (C) the means b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e avoidance arrangement; (b) treating the impermissible avoidance arrangement as if it had not been entered into or carried out; (c) disregarding any accommodating party or treating any accommodating party and any other party as one and the same person; (d) deeming persons who are connected persons in relation to each other to be one and the same person for the purposes of determining tax treatment of any amount; (e) reallocating amongst the parties to the arrangement-- (i) any accrual, or receipt, of a capital or revenue nature; or (ii) any expenditure, deduction, relief or rebate; (f) treating-- (i) the place of residence of any party to the arrangement; or (ii) the situs of an asset or of a transaction, at a place other....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eration, scheme, agreement or understanding, whether enforceable or not, and includes the alienation of any property in such transaction, operation, scheme, agreement or understanding; (2) "asset" includes property, or right, of any kind; (3) "associated person", in relation to a person, means-- (a) any relative of the person, if the person is an individual; (b) any director of the company or any relative of such director, if the person is a company; (c) any partner or member of a firm or association of persons or body of individuals or any relative of such partner or member if the person is a firm or association of persons or body of individuals; (d) any member of the Hindu undivided family or any relative of such member, if th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... person who is connected directly or indirectly to another person and includes associated person; (6) "fund" includes-- (a) any cash; (b) cash equivalents; and (c) any right, or obligation, to receive, or pay, the cash or cash equivalent; (7) "party" means any person including a permanent establishment which participates or takes part in an arrangement; (8) "relative" shall have the meaning assigned to it in the Explanation to clause (vi) of sub-section (2) of section 56; (9) a person shall be deemed to have a substantial interest in the business, if-- (a) in a case where the business is carried on by a company, such person is, at any time during the financial year, the beneficial owner of equity shares carrying twenty per c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he definition and conditions under which an arrangement can be declared to be an impermissible avoidance arrangement. The section also provides for circumstances under which an arrangement shall be presumed to be entered into or carried out for main purpose of obtaining tax benefit. The proposed section 97 provides for circumstances under which an arrangement shall be deemed to lack commercial substance. The proposed section 98 provides for method of determination of consequences in relation to tax of an arrangement after it is declared to be an impermissible avoidance arrangement. It provides for certain illustrative but not exhaustive methods for determination of tax consequences. The proposed section 99 provides that for determining t....