State with reasons whether the following acts can be considered as Tax Planning or Tax Compliance or Tax Evasion: One credit note was issued by SK…

Tax Evasion: Issuance of a credit note for 75,000 by SK Ltd. as commission payable to Mr. Kapil, the son of the Managing Director, to increase his total income from 6.25 lakh to 7.00 lakh and to correspondingly reduce the company's total income is a method of reducing the tax liability of the company by recording a fictitious transaction. The company is liable to tax at a flat rate of 30% / 25% / 22%, as the case may be, whereas Mr. Kapil would not be liable to pay any tax as per the default tax regime under section 115BAC, since his total income does not exceed - 7,00,000, consequent to which he would be eligible for tax rebate of entire tax under section 87A. Reducing tax liability by recording a fictitious transaction would tantamount to tax evasion.