Avoidance of income-tax by transactions resulting in transfer of income to nonresidents
108. (1) The total income of a person shall include all income accruing to any non-resident, if-
(a) the income accrues by virtue of a transfer of any asset by the person, either alone or in conjunction with associated operations, directly or indirectly, to the non-resident;
(b) the person ,-
(i) acquires any rights by virtue of which he has power to enjoy, whether forthwith or in the future, such income; or
(ii) is entitled to receive, or has received, any capital sum, the payment whereof is in any way connected with the transfer or any associated operations; and
(c) the income would have been included in the total income of the person, had the transfer not taken place.
(2) A person shall be deemed to have the power to enjoy the income of a non-resident, if-
(a) the income is in fact so dealt with by the person so as to be calculated at some point of time and, whether in the form of income or not, to enure for the benefit of the person,
(b) the accrual or receipt of the income operates to increase the value to the person of any assets held by him or for his benefit,
(c) the person receives, or is entitled to receive, at any time any benefit provided, or to be provided, out of that income, or out of moneys, which are or will be available for the purpose by reason of the effect, or successive effects, of the associated operations on that income and assets which represent that income,
(d) such person has power by means of the exercise of any power of appointment or power of revocation or otherwise to obtain for himself, whether with or without the consent of any other person, the beneficial enjoyment of the income, or
(e) the person is able, in any manner whatsoever and whether directly or indirectly, to control the application of the income;
(3) For the purposes of determining whether a person has power to enjoy the income, regard shall be had to -
(a) the substantial result and effect of the transfer and any associated operations; and
(b) all benefits which may at any time accrue to such person as a result of the transfer and any associated operations, irrespective of the nature or form of the benefits.
(4) The provisions of this section shall not apply if the person referred to in subsection (1) shows to the satisfaction of the Assessing Officer that the transfer and all associated operations were bonafide commercial transactions and were not designed for the purpose of avoiding liability to taxation.
