Advance ruling admission turns on prima facie tax-avoidance material, while merits-based objections do not bar admission.

An advance ruling application may be refused at admission under section 245R(2) only where the Revenue shows material facts indicating a prima facie design to avoid tax by illegal or improper means. On the facts, no such material was placed on record, so the anti-avoidance objection failed. The objections on residential status were ascertainable from the stated period of stay abroad, and the other objections went to the merits of the questions on TDS under section 192 for seconded employees and the related foreign tax credit issue, rather than to admissibility. The application was therefore admitted for hearing on the merits.

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Issues: Whether the application was liable to be rejected at the admission stage on the ground that the transaction or issue was designed prima facie for avoidance of income tax under section 245R(2), and whether the objections regarding residential status and the second question precluded admission.

Analysis: The bar under section 245R(2) can operate only where the Revenue places material facts showing a prima facie design to avoid tax by illegal or improper means. No such material was brought on record. The questions raised concerned the applicant's obligation to deduct tax at source under section 192 in respect of salary paid to seconded employees and the related effect of foreign tax credit in the year of return. The objection regarding residential status was found to be ascertainable from the stated period of stay abroad, and the remaining objections went to the merits of the questions rather than to admission. They did not establish that the application was designed for tax avoidance.

Conclusion: The objection to admission was rejected and the application was admitted.

Final Conclusion: The advance ruling application survived the threshold scrutiny and was taken up for regular hearing on the merits.

Ratio Decidendi: An advance ruling application can be rejected under section 245R(2) only if there is material showing a prima facie design to avoid tax; objections going merely to the merits of the questions or to consequential factual matters do not justify refusal of admission.

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