Administrative Efficiency vs. Judicial Oversight : Clause 381 of the Income Tax Bill, 2025 Vs. Section 245OB of the Income-tax Act, 1961

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....utory provisions governing this mechanism are Clause 381 of the Income Tax Bill, 2025 and Section 245OB of the Income-tax Act, 1961. While Section 245OB was introduced by the Finance Act, 2021, Clause 381 seeks to carry forward or modify this framework under the proposed new legislation. This commentary undertakes an in-depth analysis of Clause 381, situates it within the broader legal and policy context, and offers a detailed comparison with Section 245OB. The analysis addresses the text, objectives, structure, and practical implications of the provisions, and highlights both continuity and change in the legislative approach to advance rulings in direct taxation. Objective and Purpose The legislative intent behind the establishment of t....

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.... * Constitution of the Board for Advance Rulings Clause 381(1) mandates that the Central Government shall constitute one or more Boards for Advance Rulings as may be necessary for giving advance rulings under the relevant Chapter, effective from a date to be notified. * Interpretation: The use of "shall" indicates a mandatory duty upon the Central Government, ensuring that the BAR is not optional but a required institutional mechanism. The phrase "one or more" provides flexibility to constitute multiple Boards, addressing concerns of backlog and regional diversity. * Notification Requirement: The effective date is to be appointed by notification, granting administrative discretion to the Government to operationalize the Boards as per....

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....mplex or precedent-setting matters. * Nomination Process: The clause does not detail the process or criteria for nomination, leaving it to the discretion of the CBDT. While this allows flexibility, it may also raise concerns about transparency and uniformity in appointments. * Number of Boards: The phrase "as may be necessary" is open-ended, and the actual number constituted will impact pendency and accessibility for taxpayers across the country. * Potential for Administrative Bias: Since both members are serving tax officers, there may be apprehensions regarding independence and impartiality, especially in disputes involving significant revenue stakes or interpretational complexity. Comparative Analysis with Section 245OB of the Inc....

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....ce the introduction of the Board for Advance Rulings in 2021. However, Clause 381, as currently drafted, does not reflect any substantive change or innovation. Comparative Policy and Structural Analysis  Aspect Section 245OB of the Income-tax Act, 1961 Clause 381 of the Income Tax Bill, 2025 Constitution of Board By Central Government, as necessary, by notification Identical Number of Boards One or more One or more Composition 2 members, not below rank of Chief Commissioner, nominated by the Board (CBDT) Identical Operationalization By notification in the Official Gazette By notification (no explicit mention of Gazette, but implied) Judicial Member Not required Not required Legislative Context E....

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.... argumentation and development of tax jurisprudence. Compliance and Procedural Aspects * Procedural Uniformity: The identical structure of both provisions ensures continuity in procedures, minimizing confusion during the transition to the new law. * Potential for Increased Caseload: The provision for multiple Boards may help manage increased demand, especially as the scope of advance rulings expands under the new tax code. * Appeal Mechanism: The effectiveness of the Board system will depend on the design of appellate or review provisions, which are not addressed in Clause 381 or Section 245OB but are likely to be contained elsewhere in the respective statutes. Potential Areas of Reform or Clarification * Inclusion of Judicial Mem....