TaxTMI 
TaxTMI 
2011 (12) TMI 79
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.... goods. The sales were on principal to principal basis. According to the applicant, the payments received by ASE under these supply contracts were not taxable in India. Under the Offshore Services and Offshore Supply Contracts, ASE is to make the payment of taxes in India and the applicant, the customer, was to reimburse the amounts to ASE. 2. The applicant has pleaded that ASE was assessed to tax for the years 2006-07 and 2007-08 pursuant to the directions of the Dispute Resolution Panel and it was held that payments received by ASE under Offshore Services Contracts are covered by Section 44BBB of the Act and payments received by ASE in respect of Offshore Supplies Contracts are also covered by Section 44BBB of the Act. 3. It was in that context that the applicant was approaching this Authority for a Ruling. Form No. 34D has been adopted for seeking the Ruling. Ruling is sought on the question "Whether ASE is chargeable to tax as per the Act or under the Double Taxation Avoidance Convention between India and Russia in respect of the payment made by NPCIL to ASE under the Offshore Supply Contracts." 4. In the context of the admission that ASE, the supplier and the other pa....
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....rity on the strength of Section 245N(a)(ii) read with Section 245N(b)(ii) of the Act. The procedure on receiving an application under section 245Q(1) of the Act by this Authority is prescribed by Section 245R of the Act. That section contemplates the hearing of an application in two stages. The first stage is the one contemplated by Section 245R(2) of the Act. The Authority is given the discretionary authority either to allow the application or to reject the application. The allowing contemplated is, of course, admitting the application for rendering an actual Ruling under section 245R(4) of the Act. The proviso to Section 245R(2) of the Act mandates that this Authority shall not allow the application, inter alia, where the question raised in the application "is already pending before any income-tax authority or Appellate Tribunal (except in the case of a resident applicant falling in sub-clause (iii) of clause (b) of Section 245N), or any Court." The exclusion is in respect of an issue relating to computation of the total income which is pending before any income-tax authority or Appellate Tribunal. The applicant has sought a Ruling in terms of Section 245N(a)(ii) of the Act and t....
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....bsp; is already pending before any income-tax authority or Appellate Tribunal (except in the case of a resident applicant falling in sub-clause (iii) of clause (b) of Section245N) or any Court." 9. The form of verification in the form was also simultaneously modified. The following assertion was added in the verification with effect from 3.8.2000. "I also declare that the question(s) on which the advance ruling is sought is/are not pending in my case before any income-tax authority, the Appellate Tribunal or any Court." 10. Learned Sr. Counsel submits that even though 'in the applicant's case', in the clause creating the bar was deleted the same finds a place in the verification and the verification is only on the non-pendency of a proceeding in the case of the applicant. He also submitted that if one were to look at the changes brought about in the relevant provisions from its inception in the year 1993, it could be seen that the scope for giving a Ruling has only been increased and not restricted. Hence, there was no reason to restrict the scope of situations in which a Ruling can be given or to restrictively understand the spread of jurisdiction of this Authority. Takin....
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.... transaction for the purpose of enabling him to get an advance ruling, the position we adopted therein appears to be correct. In the case on hand, the income-tax authority has held that the gains arising out of the transaction(s) relied on before us, are taxable in terms of Section 44BBB of the Act. An appeal has also been filed against it by the other party to the transaction, though subsequent to the filing of the application before us, but the order of assessment preceded the present application. The question raised in the application is whether the said payment is taxable in terms of the Act or the DTAC. Can it be said that the said question is not pending before the income-tax authority, though at the instance of the other party to the transaction? We think not. As we see it, the question of taxability of the amount paid or to be paid by the applicant to ASE was already pending before the income-tax authority when the application was filed and is now pending before the Appellate Tribunal. 14. Learned Counsel contended that in Foster, it was the payee who had approached this Authority when he payer had already been assessed, whereas, here the payer had come for a Ruling thro....
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....eon is not liable to pay income-tax in India on the amounts received by it from the applicant and, therefore, the applicant is under no obligation to deduct tax under section 195(1). It is true that in the process of deciding the applicant's legal obligation under section 195(1), the non-resident's liability to pay income-tax on the said sum has to be decided, but, on that account the question or issue about tax deduction cannot be said to be pending before the income-tax appellate authority. In the case of appeal of Raytheon, its liability under the provisions of Income-tax Act, read with DTAA arises for consideration directly and that is the sole question to be decided in appeal but in the present application the question to be decided at the instance of the applicant is about tax deduction at source. No doubt, Raytheon's liability to pay income-tax looms large in the proceedings before this Authority also but the decision on this question is incidental to the determination of the applicant's obligation to deduct tax at source. They may be inter-related or allied issues but the question raised before this Authority cannot be said to be identical nor can it be said to be the very ....
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....le under the provisions of the Act". A person paying interest or any other sum to a non-resident is not liable to deduct tax if such sum is not chargeable to tax under the Income-tax Act." 21. This means that the whole obligation to withhold tax under section 195(1) of the Act, depends on the chargeability of the amount to tax under the Income-tax Act. The Supreme Court went on to lay down that Section 195(1) of the Act "............. in clear terms lay down that tax at source is deductible only from 'sums chargeable' under the provisions of the Income-tax Act, i.e. chargeable under Sections 4, 5 and 9 of the Income-tax Act." 22. This, in our view, leads to the position that the main question to be decided or the primary question to be decided when the question of liability for the withholding of tax under Section 195 of the Act is brought before us, is the question whether the payment is chargeable to tax under the Income-tax Act. The decision on that question cannot be said to be only a decision on an incidental question. In view of what the Supreme Court has held in the above decision, we find it difficult to adopt the line of reasoning in Airport Authority Ruling relied o....