Section 180 — Arrangement to lack commercial substance

(1) An arrangement shall be deemed to lack commercial substance, if—
( a) the substance or effect of the arrangement as a whole, is inconsistent
with, or differs significantly from, the form of its individual steps or a
part; or
( b) it involves or includes—
( i) round trip financing;
( ii) an accommodating party;
( iii) elements that have effect of offsetting or cancelling each other;
( iv) a transaction which is conducted through one or more persons and
disguises the value, location, source, ownership or control of funds
which is the subject matter of such transaction;
( c) it involves the location of an asset or of a transaction or of the place
of residence of any party which is without any substantial commercial
purpose other than obtaining a tax benefit (but for the provisions of this
Chapter) for a party; or
( d) it does not have a significant effect upon the business risks or net cash
flows of any party to the arrangement apart from any effect attributable
to the tax benefit that would be obtained (but for the provisions of this
Chapter).
(2) In sub-section (1), round trip financing includes any arrangement in which,
through a series of transactions—
( a) funds are transferred among the parties to the arrangement; and
( b) such transactions do not have any substantial commercial purpose other
than obtaining the tax benefit (but for the provisions of this Chapter),
without having any regard to—
( A) whether or not the funds involved in the round trip financing can be
traced to any funds transferred to, or received by, any party in connection
with the arrangement;
( B) the time, or sequence, in which the funds involved in the round trip
financing are transferred or received; or
( C) the means by, or manner in, or mode through, which funds involved in
the round trip financing are transferred or received.
(3) The following may be relevant but shall not be sufficient for determining whether
an arrangement lacks commercial substance or not:—
( a) the period or time for which the arrangement (including operations
therein) exists;
( b) the fact of payment of taxes, directly or indirectly, under the arrange-
ment;
( c) the fact that an exit route (including transfer of any activity or business
or operations) is provided by the arrangement.