Non-Conclusive Indicators for Determining Commercial Substance - (New) Section 180(3) / (Old) Section 97(4)

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....ial Substance [ Section 180(3) ] The following may be relevant but shall not be sufficient for determining whether an arrangement lacks commercial substance or not:- • (a) the period or time for which the arrangement (including operations therein) exists; • (b) the fact of payment of taxes, directly or indirectly, under the arrangement; • (c) the fact that....

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.... regarding ignoring the attributes of an arrangement in section 97(4) since they tend to reflect the intentions, bonafide or otherwise, behind an arrangement.  As para 3.17 of Final Report on GAAR It was argued that the above provisions have introduced in direct conflict with the observation of the Supreme Court in the case of Vodafone wherein the Court laid down the following test whil....

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....l device. The stronger the evidence of a device, the stronger the corporate business purpose must exist to overcome the evidence of a device" (emphasis addedd) Factors were considered by the Court to determine whether an arrangement is a colorable or sham device. In the case of conduit company structures created for investment in India through favourable tax jurisdictions, there is always a gap....