With reference to General Anti-Avoidance Rules (GAAR), answer the following independent situations: (ii) PP Ltd, an Indian Company, has two manufacturing units, unit A in the SEZ and unit F in non-SEZ. It transfers the g

As there is no misrepresentation of facts or false submission, it is not a case of tax evasion. The company has tried to take advantage of tax provisions by diverting profits from non-SEZ unit i.e. unit F to unit A, a SEZ unit. This is not the intention of the SEZ legislation. However, such tax avoidance is specifically dealt with through the provisions contained in section 10AA(9), as per which provisions of section 80-IA(8) would get attracted in such a case. Further, if the aggregate of such transactions entered into in the relevant previous year exceed the threshold of ₹ 20 crore, domestic transfer pricing regulations under section 92BA would be attracted. Hence, the revenue need not invoke GAAR in such a case, though GAAR and SAAR can coexist as per clarification given in the CBDT circular.