2012 (2) TMI 255 - AAR - Income Tax

Maintainability of application before Advance Rulings Return of Income filed u/s 139(1) on 31.03.2010 - transaction based on which Rulings on various questions are sought, was entered into on 26.4.2008 and 26.11.2008 application filed on 17.6.2010 Held that - Date of filing of the return is the relevant date to consider the applicability of the proviso to section 245R(2), and that the filing of the return of income generates questions including the ones raised before this Authority, the jurisdiction to give a ruling in the present application has to be held to be barred. We, therefore, reject the application as being barred by clause (i) of the proviso to section 245R(2). See SEPCO III Electric Power Corporation (2011 - TMI - 207237 - Authority For Advance Rulings)

Summary

Issues: Jurisdiction of Advance Ruling Authority under section 245R(2) of the Income-tax Act

Analysis:
1. Background: The judgment pertains to an application before the Authority for Advance Rulings (AAR) involving the interpretation of the proviso to section 245R(2) of the Income-tax Act. The applicant had filed a return of income, and the question raised for a ruling was deemed to be already pending before an Income-tax Authority, triggering the jurisdictional bar under the proviso.

2. Interpretation of Proviso: The AAR emphasized that the proviso divests the Authority of jurisdiction in specific situations, including when the question is pending before any Income-tax Authority, Tribunal, or Court. The AAR clarified that the bar is attracted if the question raised in the application is already pending before an Income-tax Authority, irrespective of whether the Authority has pointedly raised the question.

3. Purpose of Advance Ruling: The AAR noted that the objective of Advance Rulings is to expedite dispute resolution and attract foreign investment. However, it stressed that the jurisdictional bar under the proviso must be strictly construed, and the Authority's jurisdiction should not be restricted unless the case falls strictly within the proviso's clauses.

4. Jurisdiction of AAR: The AAR highlighted that its jurisdiction is restricted in circumstances where the question raised before it has arisen before the Income-tax Authority. Filing a return of income triggers various questions related to computation, exemptions, and chargeable income, which could overlap with the issues raised before the AAR.

5. Crucial Date for Jurisdiction: The AAR determined that the crucial date for assessing the applicability of the proviso is the filing of the return of income by the applicant, not the date of the Authority's hearing or the Income-tax Authority's notice issuance. This fixed common point ensures certainty in determining the existence of jurisdiction.

6. Decision: Based on the interpretation of the proviso and the relevant dates, the AAR concluded that the application before it was barred by clause (i) of the proviso to section 245R(2) of the Act. Therefore, the AAR rejected the application on grounds of jurisdictional constraints.

In conclusion, the judgment delves into the nuanced interpretation of the proviso to section 245R(2) of the Income-tax Act concerning the jurisdiction of the Advance Ruling Authority. It underscores the importance of clarity and certainty in determining jurisdictional bars, ultimately leading to the rejection of the application in question.