2012 (2) TMI 256 - AAR - Income Tax

Advance Ruling Jurisdiction Challenge Dismissed

The Authority rejected the application challenging the jurisdiction of the Advance Ruling Authority under section 245R(2) of the Income-tax Act. It held ... Maintainability of application before Advance Rulings - transaction based on which Rulings on various questions are sought, was entered into on 1.10.2006 - assessments for the A.Y. 2007-2008 have been completed - Held that:- Date of filing of the return is the relevant date to consider the applicability of the proviso to section 245R(2) , and that the filing of the return of income generates questions including the ones raised before this Authority, the jurisdiction to give a ruling in the present application has to be held to be barred by clause (i) of the proviso to section 245R(2) of the Act. See SEPCO III Electric Power Corporation (2011 - TMI - 207237 - Authority For Advance Rulings) – Application dismissed. Issues:Jurisdiction of Advance Ruling Authority under section 245R(2) of the Income-tax Act based on the timing of filing the return of income in relation to the application for advance ruling.Analysis:1. The judgment refers to a previous ruling where it was held that if an applicant has already filed a return of income related to a transaction in question, the application before the Advance Ruling Authority will be barred by the proviso to section 245R(2) of the Act. The current application seeks to challenge this view along with other similar applications.2. Assessments for the applicant for certain years were completed, and the transaction in question occurred before the filing of the application for advance ruling. The contention was that the filing of a return of income does not automatically raise a question before the Income-tax Authority, and the purpose of advance rulings is to expedite dispute resolution.3. The proviso to section 245R(2) outlines specific scenarios where the Advance Ruling Authority's jurisdiction is restricted, including when the question is pending before any Income-tax Authority or involves fair market value or tax avoidance. The Authority emphasized the need for a strict interpretation of this provision to maintain clarity and ensure foreign investment attraction.4. The argument presented was that the bar under the proviso should only apply if the question raised in the advance ruling application is already pending before an Income-tax Authority, Tribunal, or Court. Merely filing a return should not trigger this bar unless the specific question has been raised by the Income-tax Officer.5. The Authority highlighted that its jurisdiction is limited by the provisions of the Income-tax Act, and if a question arises from the return filed by the applicant, it would fall within the purview of the Income-tax Authority. The timing of filing the return vis-a-vis the advance ruling application determines the applicability of the proviso.6. Emphasizing the importance of certainty in determining jurisdiction, the Authority held that the relevant date for considering the proviso's applicability is the date of filing the return of income juxtaposed with the filing of the application for advance ruling. This fixed point ensures consistency and clarity in jurisdictional matters.7. Ultimately, the Authority rejected the application as being barred by the proviso to section 245R(2) of the Act, citing that the filing of the return of income generated questions that were the subject of the advance ruling application. Additionally, the applicant's lack of reasonable diligence in approaching the Authority further justified the rejection of the application.