The Delhi High Court upheld the ruling of Authority of Advance Ruling (AAR) wherein it was ruled that notice under section 143(2) merely asks the applicant to produce any evidence on which it may like to rely in support of its return.
It does not even remotely disclose any application of mind to the return filed by the applicant. For this reason, AAR has held that that question cannot be said to be pending to attract the bar under clause (i) of the proviso to Section 245R(2) of the Act.
The Commissioner of Income Tax challenged the order passed by the Authority for Advance Rulings (AAR) on the ground that it is in violation of the jurisdictional bar under proviso to Section 245R(2) of the Income Tax Act, 1961. Petitioner prayed for a stay on the operation of the impugned order.
The petitioners submit that the impugned order is liable to be quashed as the application of respondent was not maintainable before AAR because of non-existence of “Jurisdictional Fact”.
He further refers to the report under Section 245R(2) filed by the Deputy Commissioner of Income Tax to point out that the main issue before the Assessing Officer in the scrutiny proceedings is the same as before the Authority for Advance Rulings namely whether the royalty is taxable in the hands of the petitioners at the time of actual receipt or otherwise.
The petitioner urged that since the questions raised in the Application before the AAR were already pending before the Assessing Officer, the AAR was barred from assuming jurisdiction in view of the threshold bar enshrined in clause (i) under Proviso to section 245 R (2) of the Act.
AAR in the light of the decision two Division Benches of this Court in Hyosung Corporation vs. Authority for Advance Rulings & Ors. have held that a question cannot be said to be pending under Clause (i) of the proviso to Section 245R(2) upon issuance of a mere notice under Section 143(2) of the Act, especially when it has been issued in a standard pre-printed format and the questions raised before the authority for advance ruling do not appear to be forming the subject matter of the said notice.
In the light of the decision, the division bench of Justice Manmohan and Justice Sanjeev Narula did not find any infirmity in the order passed by the AAR and held that the Special Leave Petitions challenging the judgments of the Division Benches have been dismissed. Consequently, the issues of law and fact raised by the learned counsel for petitioners are no longer res Integra.
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