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Application for advance ruling under section 245Q(1) of the Income-tax Act, 1961 regarding tax treatment of earnings received in India in Indian rupees for letting out London properties to Indian parties. Analysis: The applicant, a private limited company incorporated in the United Kingdom, sought an advance ruling on whether the rental income received in Indian rupees from letting out properties in the U.K. to Indian businessmen and tourists would be treated as invisible exports and qualify for income-tax exemption under the Income-tax Act, 1961. The company believed that collecting rents in Indian rupees in India would result in foreign exchange savings, akin to export of goods earning foreign exchange. However, the Authority noted that the rents would be taxable under Indian income-tax law unless specifically exempted. The applicant's assumption of savings in foreign exchange does not automatically qualify the earnings as invisible exports exempt from tax under relevant provisions such as sections 10B, 80HHB, 80HHC, 80HHD, and 80HHE. Since the proposed transactions did not fall under any statutory exemption, the Authority ruled that the applicant was not entitled to any exemption for the earnings received in India in Indian rupees from letting out London properties to Indian parties. The Authority highlighted that without clear details of the letting arrangement, it was not possible to determine if the rents received in Indian rupees would be less than what Indian businessmen and tourists would pay for similar accommodation in England. While acknowledging the potential saving in foreign exchange, the Authority emphasized that such savings did not equate to invisible exports exempt from tax. The ruling clarified that the applicant's proposal did not align with the provisions governing exemptions for export earnings, thereby negating the claim for any exemption on the earnings generated through the proposed transactions. The ruling was based on the lack of specific statutory exemption applicable to the applicant's income arising from the letting of properties to Indian parties and receiving earnings in Indian rupees. In conclusion, the Authority rejected the applicant's plea for income-tax exemption on the earnings received in India in Indian rupees from letting out London properties to Indian parties. The ruling emphasized the absence of a statutory provision exempting such earnings and highlighted that the proposed transactions did not qualify as invisible exports under the Income-tax Act, 1961.
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