CBDT notifies New Norms for Approving Panel under GAAR [Read Notification]

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The Central Board of Direct Taxes (CBDT) has notified Rules 10UD & 10UE for the purpose of making reference to Approving Panel under section 144BA(4) of the Income Tax Act under General Anti Avoidance Rule ( GAAR ).

According to the New Amendment, Rule 10UD i.e., Reference to the Approving Panel.- A reference under sub-section (4) of section 144BA to an Approving Panel shall be,-

  • made in Form No 3CEIA along with a copy of Form No 3CEI and such other documents which the Principal Commissioner or the Commissioner deems fit; and
  • submitted in four sets, either in Hindi or English.

Section 144BA(4) provides for making reference to the Approving Panel for the purpose of the declaration of the arrangement as an impermissible avoidance arrangement. A reference to an Approving Panel shall be made in Form no. 3CEIA along with a copy of Form No. 3CEI.

Rule 10UE i.e., Procedure before the Approving Panel.-

  • A reference received under rule 10UD shall be caused to be circulated by the Chairperson of the said Panel among the other members within seven days from the date of receipt of such reference.
  • The Chairperson of the Approving Panel shall cause to be issued the notice to the Assessing Officer and the assessee affording an opportunity of being heard specifying therein the date and place of the hearing.
  • The meetings of the Approving Panel shall take place at such place as the Approving Panel may decide.

Rule 10UF. Remuneration.- (1) For attending the meeting of an Approving Panel, the Chairperson and other members of the said Panel shall be entitled to- (i) a sitting fee of six thousand rupees per day; and (ii) travelling allowances including transportation charges for local travel and daily allowances (including accommodation) as admissible to an officer of the rank of Special Secretary to the Government of India.

The expenditure of an Approving Panel shall be met from the budgetary grants of the Department of Revenue in the Ministry of Finance of the Central Government.

The regulation allows tax officials to deny tax benefits if a deal is found without any commercial purpose other than tax avoidance. It allows tax officials to target participatory notes. Under GAAR, the investor has to prove that the participatory note was not set to avoid taxes.

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