2011 (8) TMI 213 - AAR - Income Tax

Application for advance ruling - Pendency of issue before AO - Maintainability - Held that - on the date of filing of the present application before us relating to the rights and obligations arising out of the contract dated 10-5-2006 entered into by the applicant insofar as it relates to the question posed in this application was pending before the concerned Assessing Officer. - merely because a questionnaire in general terms is served or a questionnaire raising specific issues is served as a further step towards completing the assessment cannot lead to the position that the question sought to be raised before us is not pending before the Assessing Officer when the return of income is filed. - Application for advance ruling rejected being the issue is pending before AO.

Summary

Issues:
1. Jurisdiction of the Authority for Advance Rulings to entertain the application under section 245Q of the Income-tax Act.
2. Effect of pending proceedings under sections 197 and 263 of the Act on the application for advance ruling.
3. Impact of regular assessment proceedings for the years 2007-08 to 2009-10 on the advance ruling application.
4. Interpretation of the proviso to section 245R(2) of the Act regarding the bar to admitting an application for Advance Ruling.

Analysis:

1. The Authority considered the jurisdiction to entertain the application under section 245Q of the Income-tax Act. It was noted that the mere pendency of proceedings under sections 195 or 197, or a final order thereon, does not prevent the Authority from considering an advance ruling application. The objection raised by the Revenue regarding the bar to jurisdiction based on proceedings under sections 197 and 263 was overruled by the Authority.

2. The Authority acknowledged that the pendency of proceedings for regular assessment for the years 2007-08 to 2009-10 could impact the advance ruling application. It was highlighted that the filing of a return of income and the ongoing assessment proceedings necessitate the consideration of all claims by the Assessing Officer, including the taxability of income in question.

3. The significance of filing a return of income and the pendency of assessment proceedings was emphasized in relation to the proviso to section 245R(2) of the Act. The Authority referred to previous judgments to illustrate the importance of the filing of a return and the existence of pending claims before Tax Authorities in determining the admissibility of an advance ruling application.

4. Regarding the interpretation of the proviso to section 245R(2) of the Act, the Authority clarified that once any condition of the proviso is satisfied, it creates a bar to the jurisdiction of the Authority to give a ruling. The Authority highlighted that the bar is not discretionary and must be adhered to when any condition of the proviso is met, leading to the rejection of the application in question.

In conclusion, the Authority rejected the advance ruling application based on the proviso to section 245R(2) of the Act, emphasizing the impact of pending assessment proceedings and the requirement for claims to be considered by the Assessing Officer before seeking an advance ruling.