TaxTMI 
TaxTMI 
2012 (8) TMI 739
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....red into an agreement with Spectrum USA for hiring a vessel. It withheld taxes under Section 195 ITA on the payments made by it. It filed its return of income for the Assessment Year 2009-2010. After having filed the return, it had filed the application before the AAR on 17.05.2010, raising identical questions. The Third Petition is also filed by Sin Oceanic, and arises out of the same transaction as mentioned in the second writ and is against the same order of the AAR. 3. All the Petitioners had contended before the AAR, that the objective of the mechanism of advance rulings, with respect to applicants entitled to apply, is to cut short the delay in dispute resolution, and therefore the bar enacted under Section 245R(2) must be strictly construed. They also urged that since the purpose of this mechanism was also to attract foreign investment, the AAR should be wary of interpreting the proviso too widely and consequently, of restricting its own jurisdiction. They also contended that restrictions on jurisdiction conferred have to be considered strictly, and jurisdiction ought not to be declined unless the application comes strictly within the clauses of the restricting proviso. ....
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....dent on the date when the application comes up for hearing under Section 245R (2) or under Section 245R (4) of the Act. The Authority felt that this period could not be left to the vagaries of the progress of the process of the Income Tax Authority issuing a notice or the uncertainties of the progress of the application before the authority. It said that jurisdiction could not depend on such vagaries and therefore the need for fixing a definite common point for determining jurisdiction necessitated that the date of filing of return by the applicant would serve as this point. 7. On the basis of the above reasoning, the AAR held that in the case of the applicants, keeping the dates of filing of return in mind, its jurisdiction to entertain the application was barred under Section 245R(2) Proviso (1). 8. It is argued by Counsel for the petitioners that the impugned orders, declining to entertain the applications (for advance ruling) are in grave error of law. Counsel submitted that the unduly restrictive interpretation placed by the AAR in these cases, is inconsistent with the rulings of the previously constituted authorities, which had kept in mind the objective of including a ....
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....of an issue relating to computation of total income which is pending before any income-tax authority or the Appellate Tribunal and such determination or decision shall include the determination or decision of any question of law or of fact relating to such computation of total income specified in the application]: [Provided that where an advance ruling has been pronounced, before the date on which the Finance Act, 2003 receives the assent of the President, by the Authority in respect of an application by a resident applicant referred to in sub-clause (ii) of this clause as it stood immediately before such date, such ruling shall be binding on the persons specified in section 245S;] (b) "applicant" means any person who- (i) is a non-resident referred to in sub-clause (i) of clause (a); or (ii) is a resident referred to in sub-clause (ii) of clause (a); or (iii) is a resident falling within any such class or category of persons as the Central Government may, by notification in the Official Gazette, specify in this behalf; and (iv) makes an application under sub-section (1) of Section 245Q;] (c) "application" means an applicati....
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....ced before it by the applicant or obtained by the Authority, pronounce its advance ruling on the question specified in the application. (5) On a request received from the applicant, the Authority shall, before pronouncing its advance ruling, provide an opportunity to the applicant of being heard, either in person or through a duly authorised representative. Explanation.-For the purposes of this sub-section, "authorised representative" shall have the meaning assigned to it in sub-section (2) of Section 288, as if the applicant were an assessee. (6) The Authority shall pronounce its advance ruling in writing within six months of the receipt of application. (7) A copy of the advance ruling pronounced by the Authority, duly signed by the Members and certified in the prescribed manner shall be sent to the applicant and to the Commissioner, as soon as may be, after such pronouncement [Appellate authority not to proceed in certain cases. 245RR. No income-tax authority or the Appellate Tribunal shall proceed to decide any issue in respect to which an application has been made by an applicant, being a resident, under sub-section (1) of [Section 245Q].] Previous rulings ....
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....action or as a precautionary measure. It does not also confer any great advantage on the applicant since, once his application before the Authority gets decided, the conclusion of the Authority will have to be given effect to by the income-tax authorities in the pending assessments. It is perhaps possible to think of cases where an applicant might take advantage of the above interpretation to have his problems resolved both in the course of regular income-tax proceedings as well as by moving an application to the Authority. During the course of the arguments, such an instance was put to the applicant's counsel. Suppose an applicant makes a claim in the return which is rejected by the Income-tax Officer. Immediately thereafter and before moving an appeal before the Appellate Commissioner, the applicant may move an application before the Authority and claim that the application should be disposed of because, as on the date of the application, no proceeding was pending before any income-tax authority, Appellate Tribunal or court. But this does not really confer a double advantage on the assessee because, once the application is heard and disposed of by the Authority, even if subsequen....
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....turned by him is not taxable in this country has not arisen for consideration by the assessing officer or that it is not pending before him cannot be validly urged. The reason given is that a question raised in the application before the authority under section 245Q of the Act is whether the amounts received by the applicant are liable to tax in India under the provisions of the Income-tax Act. This issue has to be subject matter of adjudication before the Assessing Officer, so far as that particular income is concerned. 14. The AAR, in these cases, considered the statutory scheme and the importance of filing of a return, and if it attracts the bar under Section 245R (2) (a) of the Act. The AAR felt that even if an issue is not specifically raised, requires examination and determination, in the course of assessment proceedings before the Tax- Authorities, a preliminary objection under clause (a) by the Revenue would be justified. It was emphasized that if no return of income is filed or no claim is pending before the Tax-Authorities, an application cannot be rejected under Section 245R(2)(a)(i) of the Act. In this the AAR followed Monte Harris (1996) 218 ITR 413. 15. As to wh....
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....tood in the above context, i.e. that upon a return of income being filed, the matter is pending, in the sense that the Assessing Officer has the right to take such steps, including issuance of notice, etc, the further duty cast on the assessee to disclose all facts, including every potential income, needs to be highlighted. Thus, in Calcutta Discount Company v. Income Tax Officer AIR 1961 SC 372 the Supreme Court underlined this duty in the following terms: "a duty on every assessee to disclose fully and truly all material facts necessary for his assessment. What facts are material, and necessary for assessment will differ from case to case. In every assessment proceeding, the assessing authority will, for the purpose of computing or determining the proper tax due from an assessee, require to know all the facts which help him in coming to the correct conclusion. From the primary facts in his Possession, whether on disclosure by the assessee, or discovered by him on the basis of the facts disclosed, or otherwise-the assessing authority has to draw inferences as regards certain other facts; and ultimately, from the primary facts and the further facts inferred from them, the author....