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CMA Final · Direct Tax Laws and International Taxation · GAAR

Under the General Anti-Avoidance Rule (GAAR) in Indian income-tax law, which authority's approval or direction is required before the Assessing Officer can declare an arrangement to be an impermissible avoidance arrangement?

The Approving Panel decides the matter. The Assessing Officer refers the case through the Commissioner, and the Panel's directions are binding on both the assessee and the officer, so the declaration cannot be made without following them. The other bodies listed have no approving role in GAAR.

  1. AThe Approving Panel, whose directions bind the Assessing OfficerCorrect
  2. BThe Settlement Commission, which gives an advisory opinion
  3. CThe Commissioner of Income-tax (Appeals), who approves the declaration
  4. DThe Authority for Advance Rulings, whose view is optional

Explanation

Under the GAAR procedure the Assessing Officer refers the matter to the Commissioner, who, if not satisfied with the objections, refers it to the Approving Panel. The Panel's directions are binding on the Assessing Officer and the assessee. The other bodies have no role in approving the GAAR declaration.

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