Section 96 of ITA, 1961 : Section 96: Impermissible Avoidance Arrangement

Explanation using Example

Example of Section 96 of The Income-tax Act, 1961:

Consider a scenario where a company, ABC Pvt. Ltd., sets up multiple subsidiaries in different countries. One of the subsidiaries is in a country with a significantly lower tax rate. ABC Pvt. Ltd. then channels most of its profits through this subsidiary by setting up a complex web of transactions, which do not reflect the economic reality but are designed to take advantage of the lower tax rates.

This arrangement might be considered an impermissib...

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