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TMI Blog2021 (2) TMI 1062X X X X Extracts X X X X X X X X Extracts X X X X ..... tice under section 143(2) was issued in this case for the A.Y. 2018-19 on 23.09.2019 whereas the present application was filed much before on 29.03.2019. It has been held by this Authority in the case of Mitsubishi Corporation, Japan, In re[ 2013 (12) TMI 1118 - AUTHORITY FOR ADVANCE RULINGS, NEW DELHI ] that the question raised in advance ruling application will be considered as pending for adjudication before Income tax Authorities, only when issues are shown in return and notice under section 143(2) is issued and, thus, an application for advance ruling is to be admitted which is filed prior to issue of notice under section 143(2). In the present case also the application for advance ruling was filed prior to the issue of notice u/s 143(2) of the Act. Therefore, the questions raised by the applicant in the present case were not already pending before the Income-tax Authorities and the clause (i) of proviso to section 245R(2) is not found attracted. In the present case the Applicant has merely sought ruling on application of beneficial provisions of DTAA for determination of DDT rate on the dividend to the non-resident shareholder. There is no design to avoid tax by any ille ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufacturing, trading and distribution of all kinds of lighting allied products and lighting system solutions. Signify Holding B.V., a company incorporated and a tax resident of the Netherlands, holds 96.13% in the equity share capital of the Applicant. The Applicant has paid dividend to its shareholders, including Signify Holding B.V., Netherlands, during the F.Y. 2016-17 and 2017-18 and has discharged its liability towards Dividend Distribution Tax (DDT) under the provision of Section 115-O of the Income-Tax Act and proposes to declare such dividend in the future years as well. The Applicant has filed the present application on 29/03/2019 for advance ruling u/s 245Q of the Act on the following questions: 1. Based on the facts and circumstances of the case and in law, whether the beneficial provisions of the India-Hungary Tax Treaty could be invoked by the applicant on payment of dividend to Signify Holding B. V. by virtue of presence of the Most Favoured Nation clause in the Protocol to the India-Netherlands Tax Treaty? 2. In the event, the answer to Question No. 1 is in the affirmative, based on the facts and circumstances of the case and in law, whether the rate of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax. 3. The Applicant, on the other hand, has submitted that the revenue in its report dated 07/02/2020 has acknowledged the fact that the questions raised in the present application were not pending before any Income-Tax authority or Appellate Tribunal. As regarding, pendency in the scrutiny for the A. Y. 2018-19, it was submitted that notice u/s 143(2) of the Act for A.Y. 2018-19 was issued on 23 rd September 2019, which was after the filing of the present application. On the issue of applicability of clause (iii) of the proviso to Section 245R(2), it was submitted that the Revenue has not discussed in its report as to how the transaction was designed prima-facie for avoidance of tax. It was submitted that the transaction under consideration relates to dividend paid/proposed to be paid by the Applicant to its shareholders and the questions in the application relates to application of beneficial provisions of DTAA for determination of DDT rate on such dividend. It was further submitted that the dividend was a mechanism of payment of profit by the company to its shareholders which cannot be said to have been designed prima-facie for avoidance of tax. Further, the company was di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e admitted which is filed prior to issue of notice under section 143(2). In the present case also the application for advance ruling was filed prior to the issue of notice u/s 143(2) of the Act. Therefore, the questions raised by the applicant in the present case were not already pending before the Income-tax Authorities and the clause (i) of proviso to section 245R(2) is not found attracted. 6. The Revenue has also contended that clause (iii) of Proviso of Section 245R (2) was attracted as the transaction or issue was designed prima facie for avoidance of income tax. In order to claim bar under clause (iii) of Section 245R(2), there must be some necessary facts pointing to prima facie inference to a design to avoid tax by any illegal or improper means. No such fact has been brought on record by the revenue in this case. It was held in the case of Mustaq Ahmed (supra) that the mere fact that the exemption is claimed relying on a particular provision of the Income-tax Act cannot be construed as a design for avoidance of Income-tax. In order to clamp this bar at the threshold, there must be necessary facts pointing to prima facie inference of a design to avoid tax by illegal or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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