Meaning of Advance Ruling & Applicant [ Section 245N ] - International Taxation - Income Tax

Meaning of Advance Ruling Applicant [ Section 245N ] Section 245N(a) Advance Rulings means- Applicant means any person who is a- (i) A determination by the AAR in relation to a transaction which has been undertaken or is proposed to be undertaken by a NR applicant and such determination shall include the determination of any question of law or question of fact specified in the application. Non-resident referred to in a(i), (ii) A determination by the AAR in relation to the tax liability of a NR arising out of a transaction which has been undertaken or is proposed to be undertaken by a Resident applicant with such NR and Such determination shall include the determination of fact specified in the application Resident referred to in (a)(ii) (iia) A determination by the AAR in relation to the tax liability of a resident applicant, arising out of a transaction which has been undertaken or is proposed to be undertaken by such applicant, and Such determinant shall include the determination of any question of law or question of fact specified in the application; ( Added by Finance Act, 2014 ). A resident referred to in clause (a)(iia) above, as may be notified by Central Government. [Centrral Government has notified that a resident can move application for Advance Ruling, in relation to his tax liability arising out of one or more transactions valuing ₹ 100 crore or more in total which have been undertaken or proposed to be undertaken] [vide Notification No. 73 dated 28th November, 2014] (iii) A determination by the AAR in respect of an issue relating to computation of total income which is pending before any income tax Authority, or ITAT and Such determination shall include the determination of any question of law or question of fact specified in the application A resident falling within notified class or category of persons ( i.e., a public sector company). (iv) A determination or decision by the Authority whether an arrangement, which is proposed to be undertaken by any person being a resident or a non-resident, is an impermissible avoidance arrangement as referred to in Chapter X-A or not. [ w.e.f. 01/04/2015] Resident falling within any such class or category of persons as the Central Government may, by notification in the Official Gazette, specify in this behalf [ w.e.f. 01/04/2015] *AAR means Authority for Advance Ruling. Note:- In Union Budget 2017, the Government had decided to merge the Authority for Advance Ruling (AAR) for income-tax, central excise, custom duty and service tax. Hence, the meaning of applicant is expanded with effect from 1/4/2017 to include 1. An applicant as defined in section 28E(c) of the Customs Act, 1962; 2. An applicant as defined in section 23A(c)of the Central Excise Act, 1944; 3. An applicant as defined in section 96A(b) of the Finance Act, 1994 The Finance Act, 2021 has amended provisions of section 245N(b) to provide that above three points shall be omitted with effect from such date as appointed by the Central Government by notification in the Official Gazette. Authority shall cease to act as an Authority for Advance Rulings for the purposes of Chapter V of the Customs Act, 1962 on and from the date of appointment of the Customs Authority for Advance Rulings under section 28EA of the Customs Act, 1962. Where an advance ruling has been pronounced, before the date on which the Finance Act, 2003 receives the assent of the President, by the Authority in respect of an application by a resident applicant referred to in sub-clause ( ii ) of this clause as it stood immediately before such date, such ruling shall be binding on the persons specified in section 245S . Thus advance ruling under the Income Tax Act could be sought by:- a non-resident resident having transactions with non-residents a resident a public sector company Further the advance ruling is to be given on questions specified in relation to transaction by the applicant himself and not by any other person. However the applicant can be a representative assessee on behalf of trust through which it has made investments in India.