2012 (5) TMI 235 - AAR - Income Tax

Application for advance rulings before AAR after filing of return u/s 139(1) - held that - the date of the filing of the application before the Authority should be the crucial date for determining the question of the applicability of clause (i) of the proviso to section 245R(2) of the Act and not the date when the application comes up for hearing either under section 245R(2) or under section 245R(4) of the Act. Once we come to the conclusion that the date of filing of the return is the relevant date to consider the applicability of the proviso to section 245R(2) of the Act, 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. - Application rejected.

Summary

Issues:
1. Interpretation of proviso to section 245R(2) of the Income-tax Act, 1961 regarding the jurisdiction of the Authority for Advance Rulings.
2. Determining the relevant date for considering the applicability of the proviso to section 245R(2) of the Act.
3. Impact of filing a return of income on the jurisdiction of the Authority for Advance Rulings.

Issue 1: The judgment addressed the interpretation of the proviso to section 245R(2) of the Income-tax Act, 1961, concerning the jurisdiction of the Authority for Advance Rulings. The court reiterated that the Authority's jurisdiction is restricted in specific circumstances, such as when the question raised is pending before any income-tax authority, Appellate Tribunal, or court. The purpose of an Advance Ruling is to expedite dispute resolution and attract foreign investment. The court emphasized that jurisdiction restrictions should be strictly construed to avoid turning away eligible applicants. It clarified that the Authority must decline jurisdiction when the question sought for a ruling is already pending before an income-tax authority.

Issue 2: The judgment deliberated on determining the relevant date for considering the applicability of the proviso to section 245R(2) of the Act. It emphasized that the crucial date for assessing the jurisdiction bar is the date of filing the return of income by the applicant, not the date of the application hearing. The court reasoned that fixing a definite starting point is essential to ensure consistency and certainty in determining jurisdiction. It noted that uncertainty would arise if the starting point depended on the income-tax authority issuing a notice, emphasizing the need for a fixed common point to ascertain jurisdiction.

Issue 3: The judgment analyzed the impact of filing a return of income on the jurisdiction of the Authority for Advance Rulings. It highlighted that filing a return ushers in various questions related to income computation, exemptions, and tax liabilities. The court concluded that filing a return generates questions, including those raised before the Authority, thus barring the Authority's jurisdiction to provide a ruling. It rejected the application as barred by the proviso to section 245R(2) of the Act, emphasizing the importance of certainty in determining jurisdiction based on the date of filing the return.