Procedure on Receipt of Application - Section 245R - International Taxation - Income Tax

Procedure on Receipt of Application - Section 245R STEP I On receipt of an application, the Authority shall cause a copy thereof to be forwarded to the Principal Commissioner or Commissioner and, if necessary, call upon him to furnish the relevant records. such records will be returned to the Principal Commissioner or commissioner as soon as possible. [ Section 245R(1) ] STEP II AAR may allow or reject the application. However in following 3 cases, AAR shall reject the application :- Pending with Income-tax authorities/ tribunal /Court is already pending before any income tax authority or appellate tribunal or any court. however, a resident falling any class or category of persons as notified by the central government can seek for advance ruling even if question raised is pending before any income tax authority or appellate tribunal. Determination of Fair market Value Involve the determination of the fair market value of any property. Transaction designed for avoidance of income tax relates to a transaction or issue which is designed prima facie for the avoidance of income-tax except in the case of resident applicant falling in sub-clause ( iii ) of section 245N(b) or in the case of an applicant falling in sub-clause (iiia) of section 245N(b). Opportunity of being heard shall be given to the applicant before order of rejection of application. Where the application is rejected, reasons for such rejection shall be given in the order. Copy of order shall be sent to the applicant and to the CIT No appeal is possible against order of rejection. on receipt of an application under the proviso to section 245Q(4), the Board for Advance Rulings may, by an order, reject the application referred to in section 245R(1) thereof as withdrawn on or before the 31st day of December, 2024. (inserted Finance (No. 2) Act, 2024 w.e.f. 01.10.2024) [ Section 245R(2) ] STEP III A copy of every order made u/s 245R(2), shall be sent to the applicant and to the Principal Commissioner or Commissioner. [ Section 245R(3) ] STEP IV Where an application is allowed u/s 245R(2), the Authority shall, after examining such further material as may be placed before it by the applicant or obtained by the Authority, pronounce its advance ruling on the question specified in the application. [ Section 245R(4) ] STEP V On a request received from the applicant, the Authority shall, before pronouncing its advance ruling, provide an opportunity to the applicant of being heard, either in person or through a duly authorised representative. [ Section 245R(5) ] STEP VI The Authority shall pronounce its advance ruling in writing within 6 months of the receipt of application. [ Section 245R(6) ] STEP VII A copy of the advance ruling pronounced by the Authority, duly signed by the Members and certified in the prescribed manner shall be sent to the applicant and to the Principal Commissioner or Commissioner, as soon as may be, after such pronouncement. [ Section 245R(7) ] The Order of AAR giving its opinion is a final order and no Appeal is possible against such an order . Rectification of mistake:- The authority may, with a view to rectifying any mistake apparent from the record, amend any order passed by it before the ruling pronounced by the authority has been given effect to by the AO. Such amendment may be made suo motu or when the mistake is brought to its notice by the applicant or the Principal Commissioner or Commissioner, but only after allowing the applicant and the Principal Commissioner or Commissioner reasonable opportunity of being heard. Faceless Scheme for advance Rulings The Central Government may, by notification in the Official Gazette, make a scheme for the purposes of giving advance rulings under this Chapter by the Board for Advance Rulings, so as to impart greater efficiency, transparency and accountability by - (a) eliminating the interface between the Board for Advance Rulings and the applicant in the course of proceedings to the extent technologically feasible; (b) optimising utilisation of the resources through economies of scale and functional specialisation; (c) introducing a system with dynamic jurisdiction. [ Section 245R(9) ] Applicability or non applicability of other provisions of the act The Central Government may, for the purposes of giving effect to the scheme made u/s 245R(9), by notification in the Official Gazette, direct that any of the provisions of this Act shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the said notification: No such direction shall be issued after the 31st day of March, 2023. The Central Government may amend any direction, issued under this sub-section on or before the 31st day of March, 2023, by notification in the Official Gazette. [ Section 245R(10) ] Every notification issued u/s 245R(9) and 245R(10) shall, as soon as may be after the notification is issued, be laid before each House of Parliament. [ Section 245R(11) ]