Section 96 - Impermissible avoidance arrangement - Income-tax Act, 1961

1 [****] 3 [****] 4 [ 96. Impermissible avoidance arrangement . (1) An impermissible avoidance arrangement means an arrangement, the main purpose of which is to obtain a tax benefit, and it (a) creates rights, or obligations, which are not ordinarily created between persons dealing at arm s length; (b) results, directly or indirectly, in the misuse, or abuse, of the provisions of this Act; (c) lacks commercial substance or is deemed to lack commercial substance under section 97, in whole or in part; or (d) is entered into, or carried out, by means, or in a manner, which are not ordinarily employed for bona fide purposes. (2) An arrangement shall be presumed, unless it is proved to the contrary by the assessee, to have been entered into, or carried out, for the main purpose of obtaining a tax benefit, if the main purpose of a step in, or a part of, the arrangement is to obtain a tax benefit, notwithstanding the fact that the main purpose of the whole arrangement is not to obtain a tax benefit. ] *************** NOTES:- 1. Omitted vide Section 29 of the Finance Act 1965 w.e.f. 01-04-1965 before it was read as, Total income for super-tax 96. Subject to the provisions of this Chapter, the total income of any person shall, for the purposes of super-tax, be the total income as assessed for the purposes of income-tax, and where an assessment of total income has become final and conclusive for the purposes of income-tax for any assessment year, the assessment shall also be final and conclusive for the purposes of super-tax for the same assessment year. 2. Inserted vide Section 41 of the Finance Act 2012 w.e.f. 01-04-2014 3. Omitted vide Section 25 of the Finance Act, 2013 w.e.f. 01-04-2014 before it was read as, 2 [ 96. Impermissible avoidance arrangement . (1) An impermissible avoidance arrangement means an arrangement, the main purpose or one of the main purposes of which is to obtain a tax benefit and it (a) creates rights, or obligations, which are not ordinarily created bet-ween persons dealing at arm s length; (b) results, directly or indirectly, in the misuse, or abuse, of the provisions of this Act; (c) lacks commercial substance or is deemed to lack commercial substance under section 97, in whole or in part; or (d) is entered into, or carried out, by means, or in a manner, which are not ordinarily employed for bona fide purposes. (2) An arrangement shall be presumed to have been entered into, or carried out, for the main purpose of obtaining a tax benefit, if the main purpose of a step in, or a part of, the arrangement is to obtain a tax benefit, notwithstanding the fact that the main purpose of the whole arrangement is not to obtain a tax benefit. ] 4. Inserted vide Section 26 of the Finance Act, 2013 w.e.f. 01-04-2016