| Read the following statements carefully about General Anti-Avoidance Rules (GAAR) and choose the correct statements from the codes given below |
| 1. GAAR is a set of general rules enacted so as to check the tax avoidance. |
| 2. Anti-Avoidance Rules are broadly divided into two categories namely 'General' and 'Specific'. |
A) Only 1
B) Only 2
C) Both 1 and 2
D) neither 1 nor 2
Correct Answer: C
Solution :
[c] GAAR is a concept which generally empowers the Revenue Authorities in a country to deny the tax benefits of transactions or arrangements which do not have any commercial substance or consideration other than achieving the tax benefit. Anti-Avoidance Rules are divided into two categories namely 'General' and 'Specific'. Thus, legislation dealing with 'General' rules are termed as GAAR, whereas legislation dealing with 'Specific' avoidance are termed as GAAR.
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