TagTax avoidance

GAAR and Tax Treaties

[The following guest post is contributed by Dr. Nigam Nuggehalli, who is an Associate Professor at Azim Premji University, Bangalore] The General Anti-Avoidance Rules (GAAR), to be in effect from April 1, 2017, were introduced by the government in a fit of frustration. The government found that many profitable companies were successful in avoiding tax even though their tax planning measures were...

Scheme of Arrangement & Tax Authorities: The Vodafone Essar Case

Lately, the income tax authorities have been actively objecting to schemes of arrangement initiated under sections 391 to 394 of the Companies Act, 1956 on the ground that the schemes are intended to avoid applicable taxes. Such objections are usually raised when the scheme is presented for sanction of the High Court. This scenario has been played out last week in a decision of the Gujarat High...

Recent AAR Rulings on the ‘Mauritius route’

Some recent reports have pointed out that the Authority for Authority for Advance Rulings has once again sanctified the “Mauritius route”.  While the law since Azadi Bachao Andolan’s case has upheld the sanctity of a tax residency certificate (TRC), the Revenue has not given up its efforts to find the “hidden reality” or “true facts”.  The Revenue has also met with some success in its...

The GAAR Guidelines

One of the major changes implemented by the Finance Act has been the introduction of the General Anti-Avoidance Rules (GAAR). The Government has recently issued draft GAAR Guidelines in this connection, which can be downloaded from here. It is proposed to introduce a monetary threshold for invocation of the GAAR provisions, and time limits (such as time limits for making references to the...

The Bombay High Court on applying Vodafone to Sham Transactions

In Killick Nixon v DCIT, decided on 6 March 2012, a Division Bench of the Bombay High Court (Dr DY Chandrachud and MS Sanklecha JJ.) has considered the application of the guidance given by the Supreme Court in Vodafone to a transaction that was found at first instance to constitute a sham. The attempt by the taxpayer in this case is reminiscent of the tax avoidance transactions that shaped...

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