Applicability of General Anti-avoidance Rules (GAAR) - (New) Section 178 / (Old) Section 95

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....ing from such declaration in accordance with the provisions contained in the relevant Chapter governing GAAR. Application of GAAR to Individual Steps or Parts of an Arrangement [ Section 178(2) ] • 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. Meaning of Important Term • "Arrangement" means any step in, or a part or whole of, any transaction, operation, scheme, agreement or understanding, whether enforceable or not, and includes the alienation of any property in such transaction, operation, scheme, agreement or understanding; [ Section 184(2) ] • "Step" includes a measure or an action, particularly one o....

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....sessee even if such provisions are not beneficial to him. [ Section 90(2A) ] Meaning of Important term • "Arrangement" means any step in, or a part or whole of, any transaction, operation, scheme, agreement or understanding, whether enforceable or not, and includes the alienation of any property in such transaction, operation, scheme, agreement or understanding. [ Section 102(1) ] • "Step" includes a measure or an action, particularly one of a series taken in order to deal with or achieve a particular thing or object in the arrangement. [ Section 102(9) ] • The term impermissible avoidance arrangement is defined u/s 96. [ Refer this Chapter ] Illustrative cases where....

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.... a case of misrepresentation of facts by showing production of non SEZ unit as production of SEZ unit. Hence, this is an arrangement of tax evasion and not tax avoidance. Tax evasion, being unlawful, can be dealt with directly by establishing correct facts. GAAR provisions will not be invoked in such a case. Example 1B Facts - In the above example 1A, let us presume that M/s India Chem Ltd. does not show production of non-SEZ unit as a production of SEZ unit but transfers the product of non-SEZ unit at a price lower than the fair market value and does only some insignificant activity in SEZ unit. Thus, it is able to show higher profits in SEZ unit than in non-SEZ unit, and consequently claims higher deduction in computation ....