TaxTMI 
TaxTMI 
2007 (8) TMI 731
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....mitting returns of his business income derived from local sales and export sales with ADIT (International Taxation), Chennai. The returns for the assessment years 2005-06 and 2006-07 were filed on October 30, 2005 and October 31, 2006, respectively. In the returns, the income included the income derived from purchase and export of gold ornaments. However, the applicant filed revised returns for these two years on March 30, 2007, claiming exemption of the income relating to purchase of gold ornaments for export. Under Explanation 1(a) and (b) to section 9(1)(i), in the case of non-resident, no income shall be deemed to accrue or arise in India through or from operations which are confined to purchase of gold in India for the purpose of export. In view of this statutory provision, it is submitted that the income arising from the operations confined to purchase of gold ornaments and gold converted into gold ornaments for the purpose of export does not accrue or arise in India and therefore not liable to be included in his total income assessable to tax. 3. The following five questions were framed by the applicant for the purpose of seeking advance ruling : " (i) Whether, on the fact....
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.... (2) The Authority may, after examining the application and the records called for, by order, either allow or reject the application : Provided that the Authority shall not allow the application where the question raised in the application,- (i) is already pending before any Income-tax authority or Appellate Tribunal [except in the case of a resident applicant falling in sub\x7f clause (iii) of clause (b) of section 245N] or any court ; (ii) involves determination of fair market value of any property ; (iii) relates to a transaction or issue which is designed prima facie for the avoidance of Income-tax [except in the case of a resident applicant falling in sub-clause (iii) of clause (b) of section 245N]." 5. It is the contention of the DIT that the questions raised in the application are already pending for adjudication before the assessing authority. The DIT stated in his comments that for the two years, the applicant filed revised returns on March 30, 2007, claiming exemption on a part of income in terms of clauses (a) and (b) of Explanation 1 to section 9(1)(i) of the Income-tax Act, without giving any reason for claiming the exemption. The DIT further stated t....
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....aid that the question was pending before him on the date of filing the application. In Black' s Law Dictionary [Seventh Edition, page 1259]-one of the meanings of the word " question" is : " an issue in controversy ; a matter to be determined" . In P.Ramanatha Aiyar' s The Law Lexicon [Edition reprint 2002 page 1589], inter alia, the following meanings of the " question" are found : (In practice). A point on which the parties are not agreed. . . . A question to be decided by a judge implies something in contro versy, or which may be the subject of controversy. 11. In Webster' s New International Dictionary and Thesaurus-the meanings given are : 2. a subject of inquiry or debate ; a matter to be decided ; at point at issue ; problem 3. the subject of dispute ; controversy. 12. On the facts presented before us by the Departmental Representative, it is crystal clear that no controversy, no issue or dispute can be said to have arisen either explicitly or by necessary implication on the crucial date of filing the application i.e. March 26, 2007. It is only the claim for exemption made a few days later in the revised return that could have possibly set the Department in....
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....where, while the issue is already pending before the Income-tax authorities, the Appellate Tribunal or any court, the applicant also seeks recourse under section 245Q. Having already availed himself of the remedies available under the Act, the Legislature understandably requires that an applicant should not be encouraged to have recourse to another remedy by way of an application before the Authority." 15. It was concluded (page 421) : " The words ' already pending' should, therefore, be interpreted to mean : ' already pending as on the date of the application' and not with reference to any future date. In the present case, since there was no return or claim before the authorities before the application was filed before this Authority, the application cannot be rejected by invoking clause (a) of the proviso to section 245R(2)." 16. It is true that in that matter the original return was filed subsequent to filing the application before the Authority and in that return the claim for exemption was made. This difference in factual situation has no bearing on the ratio of the decision which is to the effect that the date of application is the crucial date. Though in t....
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....005-06, as already seen, the question which is raised in the application did not arise at that stage, i.e., at the time of submission of the original return. The claim for relief was laid for the first time in the revised return filed subsequent to the filing of application before the Authority for Advance Rulings. If at all, it is only on that date the subject of controversy or dispute can be said to have emerged. The notice under section 143(2) was issued prior to that date for a different reason, the reason being, the assessing authority wanted to scrutinize the return keeping in view the guidelines relating to determination of arm' s length price in international transactions. At that stage, there was no inkling of the claim for exclusion of income in the light of the provision contained in Explanation 1 to section 9(1)(i) of the Income-tax Act. 19. As regards the date of filing application, we would like to clarify that initially, the application for advance ruling was filed on March 26, 2007, in Form No. 34E (meant for notified residents) instead of Form No. 34C (meant for non-residents). On pointing this minor technical lapse, the applicant submitted another application....