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TMI BlogApplicability of General Anti-avoidance Rules (GAAR) [ Section 95 ]X X X X Extracts X X X X X X X X Extracts X X X X ..... e consequence in relation to tax arising therefrom may be determined subject to the provisions of this Chapter. (2) This Chapter shall apply in respect of any assessment year beginning on or after the 1st day of April, 2018. (3) It is hereby declared that 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sequent years as per section 10AA of the Act. Is GAAR applicable in such a case? Interpretation - There is an arrangement of setting up of a unit in SEZ which results into a tax benefit. However, this is a case of tax mitigation where the tax payer is taking advantage of a fiscal incentive offered to him by submitting to the conditions and economic consequences of the provisions in the legisl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clients for unit A and gradually, the export from unit B declined. There has not been any shifting of equipment from unit B to unit A. The company offered lower profits from unit B in computation of income. Can GAAR be invoked on the ground that there has been shifting or reconstruction of business from unit B to unit A for the main purpose of obtaining tax benefit? Interpretation - The issue ..... X X X X Extracts X X X X X X X X Extracts X X X X
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