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CS Professional · Advanced Direct Tax Laws and Practice · Transfer Pricing and General Anti Avoidance Rules (GAAR)

Under the consequences listed for an impermissible avoidance arrangement in the Income-tax Act, 2025, which action is expressly permitted?

The Act expressly permits treating the place of residence of a party, or the situs of an asset or transaction, at a place different from that shown in the arrangement. A fixed penalty, changing the previous year, or blanket disallowance is not listed.

  1. ATreating the place of residence of a party at a place other than that stated in the arrangementCorrect
  2. BImposing a fixed penalty equal to the tax benefit
  3. CConverting the assessee's accounting year to a different period
  4. DDisallowing all transactions with connected persons

Explanation

Section 181(2)(f) allows treating the residence of any party, or the situs of an asset or transaction, at a place other than that provided in the arrangement. The other options do not appear in the listed consequences.

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