Lakshmikumaran & Sridharan 律师事务所An ISO 9001 / 27001 certified law firm

Budget 2012 - GAAR & APA to be introduced

16th March, 2012

A new Chapter X-A is proposed to be inserted after Chapter X of Income-tax Act, 1961 which will empower the Revenue authorities to treat an ‘arrangement’ as an impermissible avoidance agreement. The provisions would be attracted to any arrangement where the main purpose of the same or a step or part of the agreement is to obtain a tax benefit.  

Section 92 of Chapter X is proposed to be amended to include ‘specified domestic transactions’ and international transactions. Specified domestic transactions have been explained those which are not international transactions and could be those referred to in Section 80A, 80-IA (industrial undertaking engaged in development of infrastructure) or any other transactions as may be prescribed. An additional condition is that the aggregate of such transactions entered into by the assessee in the previous year exceeds five crore rupees.
In respect of Advance Pricing Agreement, new Sections 92CC and 92 CD are proposed to be inserted which will enable the Central Board of Direct Taxes to enter into advance pricing agreement with any person determining the arm’s length price or specifying the manner in which arm’s length price is to be determined in relation to an international transaction to be entered into by that person.  The agreement will not be binding if obtained by fraud or if the law or facts having a bearing on the same change.
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