Section 98(1) — the law in short
What the courts have decided on section 98(1), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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Statutory position — section 98 and Rule 10UA: what the department may actually do once an arrangement is declared impermissible
CBDT Circulars & InstructionsCuts both ways
If the Approving Panel declares my client's arrangement impermissible, what consequences can the Assessing Officer impose, and can he recast the whole structure or only the offending part?
Section 98(1) lets the consequences be determined 'in such manner as is deemed appropriate' and gives a non-exhaustive list of seven powers, including disregarding, combining or recharacterising any step; treating the arrangement as if it had not been entered into; disregarding an accommodating party; treating connected persons as one person; reallocating receipts and expenditure among the parties; relocating the residence of a party or the situs of an asset or transaction; and looking through any corporate structure. Section 98(2) adds that equity may be treated as debt or vice versa, capital may be treated as revenue or vice versa, and any expenditure, deduction, relief or rebate may be recharacterised — but Rule 10UA confines the consequences to the offending part where only a part of the arrangement is declared impermissible.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.