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TMI Blog2013 (7) TMI 856X X X X Extracts X X X X X X X X Extracts X X X X ..... s :- (a) the Authority after having accepted/admitted the application under Section 245R(2) of the Act for the purposes of giving a ruling cannot refuse to give a ruling at the final hearing; (b) the jurisdiction of the Authority not to entertain and/or give a ruling on an application for advance ruling is only restricted to questions relating to issues as set out in the proviso to Section 245R (2) of the Act i.e. question raised is already pending before some other authority under the Act, or involves determination of fair market value of any property, or relates to an issue designed for avoidance of tax. In this case un- disputedly the bar of the proviso to Section 245R(2) of the Act is not applicable; and (c) In the alternative to the above, in any case the Authority proceeded on an unfounded assumption that giving a ruling on the question raised by the Petitioner would be to give a ruling in respect of which the applicant has acted to defeat public interest i.e. the guidelines issued by the Securities and Exchange Board of India (SEBI). 4. Brief facts leading to the petition are as under: &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the time of its IPO keep an option to AT&T open/available nor could it give its shares to AT&T prior to the public issue in the absence of AT&T achieving/generating the required quantum of business for the TML. (e) In the above circumstances, the petitioner along with M&M, BT and TML entered into option agreement dated 10 May, 2005, with AT&T. The aforesaid option agreement provided that if AT&T is able to generate certain amount of business for TML by 30 April, 2010, it would be entitled to purchase shares of TML at US dollars 3.5022 per share from the petitioner. Pursuant to the above, another agreement dated 23 June, 2005, was entered into between TML and the petitioner under which the petitioner subscribed to 9931638 i.e. 8.12% of equity capital of TML by way of preferential allotment at the price of Rs.67 per share. (f) In 2006, an IPO was offered by TML and the shares were listed on Bombay Stock Exchange and National Stock Exchange. At the time of IPO, TML complied with each and every requirement under the SEBI Guidelines and made full disclosure about the aforesaid option agreement dated 10 May, 2005, in its Red Herring P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsp; (j) The Director of Income-tax (International Taxation) respondent No.1 herein raised objection to the petitioner's application for advance ruling. However, no objection was taken with regard to the maintainability of the petitioner's application before the Authority. The objection raised by the Director of Income-tax was that the only activity of the petitioner was acquisition of shares of TML and transferring the same to AT&T as per the option agreement. (k) In its reply on 30 June, 2011, the petitioner pointed out the circumstances in which the petitioner came to hold the shares of TML and the sale of the same to AT&T as stated herein above. It was emphasized that the reason for the agreements dated 10 May, 2005 and 23 June, 2005 were on account of commercial requirements/necessity on the part of TML and not with a view to avoid any tax liability. It was also pointed out that not all of its shares in TML have been transferred to AT&T. Moreover, the balance shares owned by the petitioner in TML, can be dealt with by the petitioner as it deems fit. (l) On 13 July, 2011 the petitioner's application for advance rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... May, 2013, reads as under:- "Shri. Kuntal Kumar Sen, I.R.S. Director of Income-tax (International Taxation -II) Room No.007, Scindia House, N.M. Road, Ballard Pier, Mumbai 400 038. Dear Sir, Subject: In the order of Advance Ruling, New Delhi in AAR No.991 of 2010 in the case of M/s. Mahindra BT Investment Company (Mauritius) Limited (herein referred to as "company") (1) Please refer to the order dated August 27, 2012 in the matter of ruling by Authority of Advance ruling (Income-tax (herein referred to as "AAR") on the captioned subject which was forwarded to SEBI for information vide your letter dated December 03, 2012. (2) It is observed from the said order that the Chairman of AAR while refusing to give ruling on the matter placed before it has made an observation that the agreement between the company and AT&T in the year 2005 was entered into by circumventing SEBI (Disclosure and Investor Protection) Guidelines, 2000 (herein referred to as "DIP Guidelines"). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gned Order dated 27 August, 2012. Rule 18 of Advance Ruling Rules reads as under :- Modification of the order- 18. Where the Authority finds suo motu or on a representation made to it by the applicant or the Commissioner or otherwise, but before the ruling pronounced by the Authority has been given effect to by the Assessing Officer, that there is change in law or facts on the basis of which the ruling was pronounced, it may by order modify such ruling in such respects as it considers appropriate, after allowing the applicant and the Commissioner a reasonable opportunity of being heard. (emphasis supplied) It was pointed out to Mr. Singh that the above rule may not apply as no ruling has been rendered by the Authority in view of its refusal to give a ruling. Being confronted with the above, Mr. Tejveer Singh submitted that in that case the petitioner can move the Authority under Rule 19 of the Advance Ruling Rules for rectification of mistake. Rule 19 of the Advance Ruling Rules reads as under:- 19. Rectification of mistakes - (1) The Authority may, with a view to rectifying an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority for modification and/or rectification as we have already held that in the present facts no application for modification or rectification under Rule 18 or 19 of the Advance Ruling Rules would lie. In the above circumstances the entire controversy can be resolved by setting aside the impugned Order dated 27 August, 2012, of the Authority and directing the Authority to give a ruling on the question as framed by the petitioner. 11. In view of the above, we need not examine the other issues with regard to jurisdiction raised by the petitioner. The larger question posed in the petition are whether the Authority after having admitted the questions can refuse to give a ruling on the question of law formulated at the final hearing without there being any change in facts or circumstances and whether an Authority being a creature of the statue can refuse to rule on the question raised before it even if the same is not hit by the proviso under Section 245R (2)of the Act. The above issues are left open to be decided in an appropriate case. 12. However, before parting it, needs to be pointed out that even if it is assumed that in an appropriate case the Authority has a discretion to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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