Section 22: Amendment of section

Section 7 of the Principal Act is amended by inserting after subsection (2), new subsections “(3) - (5)” -
“(3) Where the Service is of the opinion that any disposition is not in fact given effect to or that any transaction which reduces or would reduce the amount of any tax payable is artificial or fictitious, it may disregard any such disposition or direct that such adjustments shall be made as respects liability to tax as it considers appropriate so as to counteract the reduction of liability to tax affected, or reduction which would otherwise be affected, by the transaction and any company concerned shall be assessable accordingly.
(4) For the purpose of this section “disposition” includes -
(a) any trust, grant, covenant, scheme, agreement or arrangement; or
(b) transactions between persons one of whom either has control over the other or, in the case of individuals, who are related to each other or between persons both of whom are controlled by some other person, shall be deemed to be artificial or fictitious if in the opinion of the Service or other relevant tax authority those transactions have not been made on terms which might fairly have been expected to have been made by persons engaged in the same or similar activities dealing with one another at arm’s length.
(5) A taxpayer in respect of which any direction is made under this section, shall have a right of appeal in like manner as though such direction were an assessment”.