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TMI BlogJudicial Anti-Avoidance Doctrines (JAAD)X X X X Extracts X X X X X X X X Extracts X X X X ..... ples in judicial anti-avoidance doctrines are: Business Purpose Rule (motive test) Substance over form Rule (artificiality test) Other Civil Doctrine Business Purpose Rule The business purpose rule says that a transaction must serve or test a business purpose. It requires justification of a transaction from commercial point of view, other than serving a purpose of tax avoid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed very frequently, the true meaning of this test has remained unravelled. Though various countries have tried to define it by introducing GAAR provision or similar provision, it is rather impossible to codify it in its complete form as it being a very fact specific exercise. There are various faces of substance v. form as listed below: Legal v. Economic Substance Sham transactions L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, was a landmark decision in IRC vs. Duke of Westminster which provided legitimacy to tax planning, even if its sole motive was to save tax. In substance, this judgment indicated that legal form would govern the tax consequences and that the taxpayer could arrange his affairs for tax savings. The doctrine set forth in this case has been relied upon in several cases and has been the base of va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a transaction or relationship for tax purposes. Step-transaction doctrine In a step transaction , the intermediate steps in a chain of preordained, even if bona fide, transactions may be disregarded and several related transactions may be treated as a single composite transaction. Alternatively, a single transaction may be bro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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