TMI BlogInterpretationX X X X Extracts X X X X X X X X Extracts X X X X ..... on-deductible expenditure, or non-allowable loss, in the hands of another party; or (d) result in prepayment by any other party; (2) "arm's length price" means a price which is applied, or proposed to be applied, in a transaction between persons, enterprises or undertakings, other than associated enterprises, in uncontrolled, unrelated or independent conditions; (3) "arrangement" means any step in, or a part or whole of, any transaction, operation, scheme, agreement or understanding, whether enforceable or not, and includes any of the foregoing involving the alienation of property; (4) "asset" includes property, or right, of any kind; (5) "associated enterprises" means two enterprises which are associated with each ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to any patent, invention, model, design, secret formula or process, of which the other enterprise is the owner or in respect of which the other enterprise has exclusive rights; (h) two-third, or more, of the raw materials and consumables required for the manufacture, or processing, of goods or articles carried out by one enterprise, being supplied by the other enterprise, or by persons specified by the other enterprise, and the prices and other conditions relating to the supply are influenced by such other enterprise; (i) the goods or articles manufactured, or processed, by one enterprise, being sold to the other enterprise or to persons specified by the other enterprise, and the prices and other conditions relating th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticipant, if the person is an unincorporated body; (d) any member of the Hindu undivided family or any relative of such member, if the person is a Hindu undivided family; (e) any individual who has a substantial interest in the business of the person or any relative of such individual; (f) a company, unincorporated body or Hindu undivided family having a substantial interest in the business of the person or any director, participant, or member of the company, body or family, or any relative of such director, participant or member; (g) a company, unincorporated body or Hindu undivided family, whose director, participant, or member have a substantial interest in the business of the person; or family or any rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning, research, investment or any other similar activity, whether such activity is carried on directly or through one, or more, of its units, divisions or subsidiaries, wherever located; and (b) the permanent establishment of the person referred to in sub-clause (a); (13) "funds" includes,- (a) any cash; (b) cash equivalents; and (c) any right, or obligation, to receive, or pay, the cash or cash equivalent; (14) "impermissible avoidance arrangement" means a step in, or a part or whole of, an arrangement, whose main purpose is to obtain a tax benefit and it,- (a) creates rights, or obligations, which would not normally be created between persons dealing at arm's length; (b) results, directly or i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... termined in substance between such other person and the associated enterprise; (16) "interest" includes dividend; (17) "lacks commercial substance"-A step in, or a part or whole of, an arrangement shall be deemed to be lacking commercial substance, if- (a) it would result in a significant tax benefit for any party to the arrangement (but for the provisions of section 112) but does not have a significant effect upon the business risks, or net cash flows, of that party apart from any effect attributable to the tax benefit that would be obtained but for the provisions of section 112; (b) the legal substance, or effect, of the avoidance arrangement as a whole is inconsistent with, or differs significantly from, the legal f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f those rights, regardless of any difference in the- (a) total nominal amounts of the respective security; (b) form in which it is held; or (c) manner in which it can be transferred; (21) "substantial interest in the business" -A person shall be deemed to have a substantial interest in the business, if,- (a) in a case where the business is carried on by a company, such person is, at any time during the financial year, the beneficial owner of equity shares carrying twenty per cent., or more, of the voting power; or (b) in any other case, such person is, at any time during the financial year, beneficially entitled to twenty per cent., or more, of the profits of such business. (22) "tax benefit" means, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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