2012 (2) TMI 257 - AAR - Income Tax

Interpretation of Income-tax Act's section 245R(2) proviso clarified in recent judgment

The judgment clarifies the interpretation of the proviso to section 245R(2) of the Income-tax Act, emphasizing restrictions on the Authority for Advance ... Maintainability of application before Advance Rulings – Return of Income filed for A.Y. 2009-10 - application filed on 17.05.2010 raising the identical questions – 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. We, therefore, reject the application as being barred by clause (i) of the proviso to section 245R(2). See SEPCO III Electric Power Corporation (2011 - TMI - 207237 - Authority For Advance Rulings) Issues:1. Interpretation of proviso to section 245R(2) of the Income-tax Act regarding the jurisdiction of the Authority for Advance Rulings.2. Determining whether the filing of a return of income affects the jurisdiction of the Authority for Advance Rulings.3. Application of the proviso to section 245R(2) in cases where questions are already pending before an Income-tax Authority.Analysis:1. The judgment discusses the interpretation of the proviso to section 245R(2) of the Income-tax Act concerning the jurisdiction of the Authority for Advance Rulings. It emphasizes that the Authority's jurisdiction is restricted in certain circumstances, such as when the question under consideration is already pending before an Income-tax Authority, Tribunal, or Court. The proviso outlines specific situations where the Authority must decline jurisdiction, including cases involving fair market value determination or transactions designed for tax avoidance. The Authority's jurisdiction may also be declined even if these conditions are not strictly met, as established in previous rulings.2. The judgment delves into the impact of filing a return of income on the jurisdiction of the Authority for Advance Rulings. It highlights that filing a return triggers various questions related to income computation, exemptions, and tax liabilities. The judgment clarifies that the mere filing of a return invites adjudication on all these questions, regardless of whether the Income-tax Officer raises them explicitly. Consequently, the filing of a return can lead to a situation where the Authority's jurisdiction is barred if the questions raised in the application are deemed to have arisen from the return filed.3. The judgment addresses the application of the proviso to section 245R(2) in cases where questions are already pending before an Income-tax Authority. It stresses that the relevant date for determining the applicability of the proviso is the date of filing the application before the Authority, not the date of hearing or any subsequent notice issued by the Income-tax Authority. By fixing the point at the filing of the return of income by the applicant, the judgment aims to establish certainty in determining the existence or absence of jurisdiction. Ultimately, the judgment concludes that the jurisdiction to give a ruling can be barred if the questions raised in the application are already pending before an Income-tax Authority, as per the proviso to section 245R(2).In conclusion, the judgment in this case clarifies the nuances of the proviso to section 245R(2) of the Income-tax Act regarding the jurisdiction of the Authority for Advance Rulings. It emphasizes the impact of filing a return of income on the Authority's jurisdiction and provides a detailed analysis of when the jurisdiction may be declined based on the questions raised and their status before an Income-tax Authority. The judgment underscores the importance of certainty in determining jurisdiction and upholding the statutory provisions to ensure a consistent approach in resolving tax-related disputes.