(3)The provisions of this section shall not apply if the first-mentioned person in sub-section (1) shows to the satisfaction of the [Assessing Officer] [ Substituted by Act 4 of 1988, Section 2, for " Income-tax Officer" (w.e.f. 1.4.1988).] that-(a)neither the transfer nor any associated operation had for its purpose or for one of its purposes the avoidance of liability to taxation; or(b)the transfer and all associated operations were bona fide commercial transactions and were not designed for the purpose of avoiding liability to taxation.Explanation. - For the purposes of this section,-(a)references to assets representing any assets, income or accumulations of income include references to shares in or obligation of any company to which, or obligation of any other person to whom, those assets, that income or those accumulations are or have been transferred;(b)any body corporate incorporated outside India shall be treated as if it were a non-resident;(c)a person shall be deemed to have power to enjoy the income of a non-resident if-(i)the income is in fact so dealt with by any person as to be calculated at some point of time and, whether in the form of income or not, to ensure for the benefit of the first-mentioned person in sub-section (1), or(ii)the receipt or accrual of the income operates to increase the value to such first-mentioned person of any assets held by him or for his benefit, or(iii)such first-mentioned person receives or is entitled to receive at any time any benefit provided or to be provided out of that income or out of moneys which are or will be available for the purpose by reason of the effect or successive effects of the associated operations on that income and assets which represent that income, or(iv)such first-mentioned person has power by means of the exercise of any power of appointment or power of revocation or otherwise to obtain for himself, whether with or without the consent of any other person, the beneficial enjoyment of the income, or(v)such first-mentioned person is able, in any manner whatsoever and whether directly or indirectly, to control the application of the income;(d)in determining whether a person has power to enjoy income, regard shall be had to the substantial result and effect of the transfer and any associated operations, and all benefits which may at any time accrue to such person as a result of the transfer and any associated operations shall be taken into account irrespective of the nature or form of the benefits.
