Understanding Advance Ruling under Income tax with latest case laws

In order to provide the facility of ascertaining the Income-tax liability of a non-resident, to plan their Income-tax affairs well in advance and to avoid long drawn and expensive litigation, a scheme of Advance Rulings has been introduced under the Income-tax Act, 1961. Authority for Advance Rulings has been constituted. A non-resident or certain categories of resident can obtain binding rulings from the Authority on question of law or fact arising out of any transaction/proposed transactions which are relevant for the determination of his tax liability.

WHAT IS THE SCHEME OF ADVANCE RULINGS?

With a view to avoiding a dispute in respect of assessment of income-tax liability in the case of a non-resident (and also specified categories of residents), a Scheme of Advance Ruling was incorporated in Chapter XIX-B of the Income-tax Act. The Authority for Advance Rulings (AAR) pronounces rulings on the applications of the non-resident/residents submitted in the prescribed form following prescribed procedure and such rulings are binding both on the applicant and the income-tax department. Thus, the applicant can avoid expensive and time consuming litigation on any question of law or fact which might arise from normal income-tax assessment proceedings. AAR (Procedure) Rules, 1996 provide detailed procedure for obtaining advance rulings.

WHAT IS THE COMPOSITION OF THE AUTHORITY?

The Authority for Advance Rulings consists of a Chairman , who is a retired Judge of the Supreme court and two members of the rank of Additional Secretary to the Government of India, one each from the Indian Revenue Service and the Indian Legal Service.

WHO CAN SEEK ADVANCE RULING?

Any non-resident person whether individual, company, firm, association of persons or other body corporates can make an application for seeking an advance ruling in regard to his/its tax liability. Similarly, certain category on residents can also seek advance rulings:

For Non-resident

For determination, in relation to a transaction which has been undertaken or is proposed to be undertaken by a Non-resident applicant, on any question of law or fact specified in the application.

•  For Resident

1. A resident who has undertaken or proposes to undertake a transaction with a non-resident may seek a ruling for determination on any question of law or fact in relation to such transaction involving the tax liability of the non resident.
2. A resident falling within notified categories may seek determination or decision by the Authority in respect of an issue relating to computation of total income which is pending before any Income-tax Authority or the Appellate Tribunal and such determination or decision shall include the determination or decision of any question of law or fact relating to such computation of total income.

(Central Government vide Notification No. 11456 dated 3.8.2000 as specified public sector company as defined in clause (36A) of section 2 of the Income-tax Act being such class of persons under section 245 N(b)(iii) of Chapter XIX B of the Act.)

WHO IS A NON RESIDENT?

•           Under the existing provision of the Income Tax Act, 1961(Section 6) the taxable entities are broadly divided into three groups, viz. , Individual , Company and all other persons such as Hindu Undivided Family , Firm, Association of Persons, etc.

•           These taxable entities are divided into three categories depending upon their r    esidential status. These categories are :-

•           Resident,

•           Resident but not ordinary resident and

•           Non - Resident

•           As already explained above, the benefit of seeking advance ruling is now also available to certain residents :-

An individual is a ' resident ' in any previous year:

1.         If he has been in India during the previous year for 182 days or more.

2.         If the individual (not being one of the categories mentioned in para 3 below ) has been in India during the previous year for less than 182 days but has been in India for an aggregate of 365 days or more in the four years preceding the previous year and his stay in India during the previous year is 60 days or more.

3.         The categories of person mentioned above are :

a)         a citizen of India who has left India during the previous year as a member of the crew of an Indian Ship or for the purpose of employment outside India , and

b)         a citizen of India or a person of Indian origin* who, being outside India , has come to India on a visit during the previous year.

4.         Persons falling under para 3 are resident only if their stay in India during the previous year is 182 days or more even where the duration of their stay in India during the earlier four years is 365 days or more.

* A person of Indian origin is one if he, or either of his parents or any of his grand parents, was born in undivided India .

Individuals, who are not resident in accordance with the above, are treated as non resident under the Income Tax Act.

•  COMPANY :

A company is a non resident if it is neither an Indian company nor a company the control and management of whose affairs during the previous year, is situated wholly in India .

•  EVERY OTHER PERSON :

Every other person is a non resident if, during a previous year, the control and management of its affairs is wholly situated outside India . In respect of any source of income in any previous year, he shall be deemed to be resident in India in respect of his other sources of income in the previous year.

WHAT ARE THE BENEFITS OF ADVANCE RULING?

• Helps the applicant in planning his income-tax affairs well in advance.
• Brings certainty in determining the tax liability.
• Helps avoiding long drawn and expensive litigation.
• It is inexpensive, expeditious and binding.

QUESTIONS ON WHICH ADVANCE RULING CAN BE SOUGHT?

      i.        Even though the word used in the definition is "question", it is clear that the non-resident can raise more than one question in one application. This has been made amply clear by Column No. 8 of the form of application for obtaining an advance ruling (Form No. 34C)

    ii.        Though the word "question" is unqualified, it is only proper to read it as a reference to questions of law or fact, pertaining to the income tax liability of the non-resident qua the transaction undertaken or proposed to be undertaken.

   iii.        The question may be on points of law as well as on facts; therefore, mixed questions of law and fact can also be included in the application. The questions should be so drafted that each question can be replied in brief answer. This may need breaking-up of complex questiona into two or more simple questions.

   iv.        The questions should arise out of the statement of facts given with the application. No ruling will be given on a purely hypothetical question. A question not specified in the application cannot be urged. Normally a question is not allowed to be amended but in deserving cases the Authority may allow amendment to one or more questions.

    v.        Subject to the limitations, the question may relate to any aspect of the non-resident's liability including international aspects and aspects governed by double tax agreements. The questions may even cover aspects of allied laws that may have a bearing on tax liability such as the law of contracts, the law of trusts and the like, but the question must have a direct bearing on and nexus with the interpretation of the Indian Income-tax Act.

   vi.        Advance Rulings can be obtained to determine 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 (General Anti Avoidance Rules).

 

·         Question precluded: Under section 245R, certain restrictions have been imposed on the admissibility of an application, if the question concerned is pending before other authorities. According to it, the Authority shall not allow an application where the question raised by the non-resident applicant (or a resident applicant having transaction with a non-resident) is already pending before any income-tax authority or appellate Tribunal or any Court of law. Further, the authority shall not allow the application where the question raised in it:—

1. involves determination of fair market value of any property; or
2. it relates to a transaction or issue which is designed, prima facie for the avoidance of income-tax.

Procedure of application for advance ruling: An applicant desirous of obtaining an advance ruling should apply to the Authority in the prescribed form stating the question on which the ruling is sought. The application has to be made in quadruplicate in Form Nos:—

34C - applicable to a non-resident applicant

34D - applicable to a resident having transactions with a non-resident

34E - Applicable to Public Sector Company as notified by government via Notification No.11456, dated 3/8/2000

34EA - for determining whether an arrangement is an impermissible avoidance arrangement as referred to in Chapter X-A or not

The application is to be accompanied by an account-payee demand draft for 10,000 Indian rupees drawn in favour of the Authority for Advance Ruling and made payable at New Delhi.

The application may be withdrawn within 30 days from the date of the application

SIGNING OF APPLICATION

The application including the documents annexed thereto shall be signed in the manner indicated in the prescribed form. Where a person signing the application and other documents claims to have been duly authorising to do so, the application must include a power of attorney, authorising him to sign and an affidavit setting out the unavoidable reasons which entitle him to sign it.

AUTHORISED REPRESENTATIVE

The applicant is entitled to represent his case before the Authority either personally or through an authorised representative e.g., a Chartered Accountant, Advocate, any other tax practitioner etc. If the applicant desires to be represented by an authorised representative, a power of attorney authorising him to appear for the applicant should be enclosed in original.

PAYMENT OF FEE

The application should be accompanied by a fee of Rs 2,500/- (Two Thousand Five Hundred Indian rupees) through a bank draft drawn in favour of the 'Authority for Advance Rulings' payment at New Delhi .

WITHDRAWAL OF APPLICATION

The applicant may withdraw his application within 30 days from the date of filing the application, thereafter only with the leave of the Authority.

TIME LIMIT FOR PRONOUNCING THE RULING?

The advance ruling is required to be pronounced by the Authority within six months of the receipt of a valid application.

IS ADVANCE RULING BINDING?

Advance ruling pronounced by the Authority would be binding in respect of the transaction(s) in relation to which ruling has been sought :

• on the Commissioner and the income-tax authorities subordinate to him in respect of the applicant; and   
• on the applicant who has sought it.

 

FREQUENTLY ASKED QUESTION

Q. What is the scheme of “Advance Rulings”?

Ans. With a view to avoiding disputes in respect of assessment of income-tax liability in the cases of non-residents, residents having transactions with non-residents, and public sector companies, a Scheme of Advance Ruling is currently in force in India. Chapter XIX-B of the Income-tax Act, 1961 contains statutory provisions in this behalf. The scheme enables the aforesaid categories of applicants to obtain, in advance, a binding ruling from the Authority for Advance Rulings on issues which may arise in determining their tax liabilities. Time consuming and expensive litigation can, thus be avoided.

Q. Who can apply for Advance Ruling?

Ans. Under section 245N of the Income-tax Act, 1961, a request for advance ruling can be made by an applicant. Section 245N(b) of the Income-tax Act lays down various categories of applicants.

(i) Non-resident applicants: Undersection 2(30) of the Income-tax Act a non-resident is one who is not a resident in India. Section 6 of the Income-tax Act, 1961 contains statutory provisions to determine the residential status of various tax entities, namely, individual, Hindu Undivided Family, a company, a firm, an association of persons, localauthority and others.

(ii) Resident applicants: A resident can also make an application for advance ruling in relation to a transaction undertaken or proposed to be undertaken by him with a non-resident. According to section 2(42) of the Income-tax Act, a “resident” means a person who is resident in India within the meaning of section 6 of the Income-tax Act. As already mentioned above, section 6 of the Income-tax Act contains statutory provisions to determine the residentialstatus of various tax entities.

(iii) Public sector companies: As per notification issued by the Government of India, public sector companies have also been notified to be eligible for making application for seeking advance ruling under Chapter XIX-B of the Income-tax Act. According to section 2(36A) of the Income-tax Act, 1 961 a “public sector company” means any corporation established by or underany Central, State, or ProvincialAct ora Government Company as defined in section 61 7 of the Companies Act, 1956.

Q. What are the advantages in seeking advance rulings?

Ans. The principal advantages in seeking advance ruling are as under:

(i) It helps the non-residents and residents having transactions with a non-resident, in planning their income-tax affairs well in advance. It also helps the public sector companies in resolving their disputes relating to computation of totalincome pending before any income-tax authority or the Income-tax Appellate Tribunal.

(ii) It brings certainty in determination of income-tax liability. (iii) It helps avoid long-drawn and expensive litigation.

In short, the scheme of advance ruling provides inexpensive, expeditious and binding solutions to the income-tax problems.

(At times, the parties may exercise their constitutional right to file a writ or a SLP before the High Court or the Supreme Court.)

Q. Is advance ruling binding on the applicant and the Income-tax authorities?

Ans. The Advance ruling pronounced by the Authority is binding on the applicant in respect of the transaction in relation to which the Ruling had been sought. The Ruling is also binding on the Commissioner, and the Income-tax authorities subordinate to him, in respect of the applicant who had sought it and the transaction in relation to which it had been sought. The advance ruling so pronounced continues to be binding unless there is a change in law or facts on the basis of which the advance ruling was pronounced.

Q. Can application of advance ruling be made at any time?

Ans. Non-resident applicants and resident applicants having transactions with a non-resident can apply for advance ruling even before taking up a transaction in India (i.e. proposed transaction) or in respect of a transaction, which has already been undertaken by them. In terms of section 245R(2) of the Income-tax Act, a non-resident as well as a resident having transactions with a non-resident cannot make an application for advance ruling in case the question raised by them is already pending before any income-tax authority or the Income-tax Appellate Tribunal or any Court. As a matter of caution, non-resident applicants as well as resident applicants having transaction with non-resident should apply for advance ruling before the submission of their return of income.

Public sector companies can seek advance ruling only when an issue relating to computation of their total income is pending before any income-tax authority or the Income-tax Appellate Tribunal. Thus, the pendency of an issue before any income-tax authority or the Income-tax Appellate Tribunal, on which advance ruling is sought is a pre¬condition for public sector companies for making an application for advance ruling. Public sector companies are also precluded from seeking advance ruling on a question, which is already pending before any court.

Q. Can ruling already pronounced by the Authority for Advance Rulings be revoked?

Ans. Section 245T of the Income-tax Act, 1 961 provides certain  circumstances under which advance ruling pronounced by the Authority for Advance Rulings becomes void. Under the said provisions, an advance ruling becomes void where the Authority finds, on a representation made to it by the Commissioner of Income-tax or otherwise, that an advance ruling pronounced by it has been obtained by the applicant by fraud or misrepresentation of facts. In such a situation all the provisions of the Income-tax Act shall apply as if such advance ruling had never been made. The applicants are advised to ensure that there is full and true disclosure of all material facts while seeking ruling from the Authority.

In terms of the provisions of sub-section (2) of section 245S of the Income-tax Act, the advance ruling shall cease to be binding where there is a change in law or facts on the basis of which the advance ruling was pronounced.

Q. Is there any period prescribed during which ruling remains valid? If no, can ruling already pronounced remain valid indefinitely?

Ans. The ruling is valid only in respect of the transaction/transactions, in relation to which the Ruling had been sought forthe period of that transaction.The ruling remains valid and in force unless there is a change in law or facts of the basis of which the advance ruling had been pronounced.

Q. What is the procedure for making application for advance ruling?

Ans. Procedure for making application for advance ruling has been prescribed under the Authority for Advance Rulings (Procedure) Rules, 1996. An application for advance ruling should be made in the prescribed form duly signed by the applicant or a person duly authorized in accordance with the provisions of Rule 44E of the Income-tax Rules, 1 962 as amended from time to time. Application should be made in quadruplicate and be accompanied by bank draft of Rs.2500 in favour of the Authority for Advance Rulings payable at Delhi.

Three different forms have been prescribed for different categories of applicants. While Form No. 34C has been prescribed for non  resident applicants, Form No. 34D has been prescribed for residents having transactions with a non-resident and Form No. 34E for public sector companies.

Applications are required to be accompanied by two Annexures. While Annexure-I is a statement of the relevant facts having a bearing on the question(s) on which advance ruling is required, Annexure-II is a statement containing the applicant’s interpretation of law or facts, as the case may be, in respect of the question(s) on which advance ruling is required.

Application forms are incorporated in this Handbook, they are also available online on the website of AAR www.aar.gov.in

Application may be delivered either personally or sent through Registered Post at the following address ?

Authority for Advance Rulings

5th Floor, NDMC Building,

Yashwant Place, Satya Marg,

Chanakyapuri,

New Delhi- 110 021 (INDIA)

Q. What is procedure for hearing of the application etc.?

Ans. Section 245R of the Income-tax Act, 1961 lays down the procedure required to be followed on receipt of the application. Under the said provision a copy of the application is forwarded to the jurisdictional Commissioner of Income-tax calling upon him to furnish the relevant records. The Authority may, after examining the application and the records called for, by order, either allow or reject the application. However, no application can be rejected unless an opportunity has been given to the applicant of being heard. Statutory provisions further require the reasons for rejection to be given by the Authority where the Authority decides to reject the application.

In case the Authority decides to proceed with the application, an opportunity of hearing is given both to the jurisdictional Commissioner of Income-tax as well as to the applicant. The applicant may himself attend before the Authority or may appoint an authorized representative to represent him before the Authority.

Q. Can an applicant challenge the ruling pronounced by the authority before any Court?

Ans. The advance ruling is binding on the applicant who had sought it and in respect of the transaction in relation to which it had been sought. Thus, the applicant cannot challenge the advance ruling pronounced by the Authority. However, the applicant can invoke, in appropriate cases, the writ jurisdiction of the High Courts in terms of Articles 226 and 227 of the Constitution. Similarly, extraordinary jurisdiction as conferred upon the Supreme Court of India under Article 136 of the Constitution of India can also be invoked in appropriate cases.

Q. How can the applicant be sure that his application is in order?

Ans. In order to ensure that the application is in order, the applicants are advised to check the following points before submitting the application to the Authority:

(i) Whether application is in the prescribed form.

(ii) Whether verification and the annexures/statements accompanying the application are duly signed by the applicant himself or a competent person [Rule 44E(2) of Income-tax Rules].

(iii) Whether Power of Attorney is enclosed by the authorized signatory together with affidavit in terms of proviso to sub-rule (2) of rule 10 of the Authority for Advance Rulings (Procedure) Rules, 1996.

(iv) Whether basis of claim for being a non-resident is properly documented, viz., details of stay of individual applicant in India duly supported by authenticated photocopy of passport; in case of non-resident company, authenticated copy of certificate of incorporation etc.

(v) Whether the English translation of a document is enclosed, if the document is in any language other than Hindi or English.

(vi) (a) Whether the questions framed by the applicant are based on actual or proposed transactions.

(b) Whether the questions are framed in such a manner that their reply can be given in affirmative (“Yes”) or negative (“No”).

(vii) Whether the applicant has stated in detail the relevant facts and also disclosed the details/nature of transactions as also his business or profession.

(viii) Whether the applicant has clearly stated his interpretation of law or facts in respect of questions on which ruling is sought.

(ix) Whethercomplete details of assessmentviz., details of Assessing Officer having jurisdiction over the applicant, Permanent Account Number (PAN) etc. have been stated wherever possible.

(x) Whether, in case of resident having transaction with non¬resident, basis of claim of the related person to be treated as a non-resident is spelt out.

(xi) Whether, in case of public sector company, the questions of law or of fact arise out of computation of total income and whether such questions are pending before any income-tax authority or the Income-tax Appellate Tribunal.

(xii) Whether copies of assessment order or appellate order (in case they have been passed) are enclosed along with application in the case of a Public Sector Company.

Q. Can the applicant withdraw the application once made?

Ans. In terms of sub-section (3) of section 245Q of the Income-tax Act, an applicant may withdraw the application within 30 days from the date of the application. However, traditionally, the Authority has been permitting withdrawal of application even thereafter in appropriate cases.

Q. What is the time generally taken by the authority to pronounce the ruling?

Ans. Sub-section (6) of section 245R of the Income-tax Act requires the Authority to pronounce its advance ruling in writing within six months of the receipt of the application. The aforesaid time limit is however, directory in nature. Efforts are made to pronounce the rulings as expeditiously as possible.

Q. Are the contents of the application or information revealed by the applicant during proceeding kept confidential?

Ans. The contents of the application or the information revealed by the applicant during the course of proceedings before the Authority are not revealed to outsider. Rule 24 and rule 25 oftheAuthorityfor Advance Rulings (Procedure) rules provide that the proceedings before the Authority are not open to the public and the order/ruling maybe released for publication on such terms and conditions as the Chairman of the Authority may specify. As a matter of policy the Authority does not reveal business/trade secrets of applicants to outsiders. Even the names of the applicants or their associates are sometimes withheld while releasing the rulings for publication in various law journals. Thus, the Authority ensures due protection of business interest of the applicant.

Q. Can ruling be sought bythe applicant in respect of Income-tax matters only or in respect of other matters such as Wealth Tax, Customs Duty, Excise Duty, Service Tax etc.?

Ans. Questions of law or facts pertaining to income-tax matters alone can be raised before the Authority for Advance rulings. AnotherAuthority forAdvance Rulings forthe indirect taxes has been established by the Finance Act, 1 999.

Q. Are the rulings pronounced by the Authority reported! published, if so where they can be seen?

Ans. Since February 2005, the AAR (IT) has introduced its website which contains all the rulings pronounced since February 2004. The website address is www.aar.gov.in.

Important rulings are released for publication in various tax law journals on such terms and conditions as may be prescribed by the  Chairman of the Authority. These rulings are generally published in Income-tax Reports (ITR), Current Tax Reporter (CTR), Taxman, Taxation, etc. Published rulings are also generally available in the form of CDs through various income-tax software providers such as Jurix, Tax-experts etc. There are many other websites of leading tax information services which report the rulings pronounced by the Authority.

Q. Can advance ruling be sought by a non-resident even after submitting his return of income?

Ans. According to first proviso to sub-section (2) of section 245R of the Income-tax Act, 1961 ,the Authority shall not allow the application of a non-resident where the question raised in the application is one which is already pending before any income-tax authority or the Income-tax Appellate Tribunal. The Authority may, therefore, decide upon the maintainability of such applications after due appreciation of the facts and issues involved in each case. As a matter of caution, a non-resident should submit his application before submission of his return of income.

Q. Can a ruling be sought on an issue which is already sub-Judice before the Income-tax Appellate Tribunal or Court in the applicant’s own case or some other cases where identical issues are involved?

Ans. A non-resident applicant and a resident having transactions with a non-resident are precluded from seeking a ruling on such questions, which are already pending before any income-tax authority or the Income-tax Appellate Tribunal, in its own case.

A public sector company can, however, seek ruling on such questions, which are pending before any income-tax authority or the Income-tax Appellate Tribunal. In no case, a question, which is already  pending before any court can be raised in the application for advance ruling.

Q. Is the applicant bound to execute proposed transactions in relation to which he had obtained advance ruling?

Ans. There is nothing in the Income-tax Act, 1961 requiring such applicants to actually execute such transactions.

Q. If I submit my income-tax return after having submitted application for advance ruling, what would be the fate of my application?

Ans. According to section 245RR of the Income-tax Act, 1961, no income-tax authority or the Income-tax Appellate Tribunal shall proceed to decide any issue in respect of which an application has been made by resident applicant. As far as non-resident applicants are concerned, the income-tax authorities can proceed with the return and to that extent the mere submission of application for advance ruling will not have any impact on the actions to be taken by the income-tax authorities on the return of income furnished by them. As a matter of caution, non-resident applicants should submit their application for advance ruling well before the submission of their return of income.

 

 

Now let us understand the process with few latest case law judgments.

SN	Extract of the judgment	Party	Citation
1	Ruling of Authority for Advance Rulings is binding on the assessee and the assessee can not agitate on those aspects.	Mustaq Ahmed vs. ADIT	2010) 2 ITR 315 (Chennai)(Trib.)
2	Section 245R is an integrated section not only dealing with admission of an application but also its  final disposal .AAR can independently consider nature of transaction put forward in context of  proviso (iii) to section 245 R (2) because said proviso gives jurisdiction to Authority to test  transaction projected before it in order to find out whether it is designed prima facie for  avoidance of income tax.	ABC International Inc	199 Taxman 211/ 241 CTR 289 / 55 DTR 393( AAR).
3	Pendency of proceedings under section 195 not a bar to entertaining application	Groupe Industrial Marcel Dassault, In re (AAR	340 ITR 353
4	Bound by decisions of Supreme Court and Application for ruling not to be kept pending on ground special leave petition against decision of High Court pending on similar point	LS Cable Ltd	337 ITR 35
5	An advance ruling under the Act is confined to the facts and law projected in the application  leading to the ruling and is binding only on the party and the revenue.	Cairn U.K.Holdings Ltd IN RE(	59 DTR 121 / 242 CTR 449(AAR).
6	Applicant MA , a French company , pursuant to an understanding with the other applicant GIMD , also a  French a company having floated a 100 percent subsidiary and acquired majority shares of an Indian  Company in the name of said subsidiary and later both the applicants having sold their shares in the  subsidiary to another French company , it was a preordained scheme to deal with the assets and control of  the Indian Company without actually dealing with its shares thereby avoiding payment of tax on the capital gains in India and therefore , in view of clause (iii) of the proviso to section 245R(2) Ruling on the question  relating to the taxability of the capital gains arising from the sale of said shares by the applicant was declined. The Authority also held that nature of proceedings under section 201 on the basis of section 195  are only preliminary and not conclusive and therefore ,pendency of proceedings or order passed under  section 201 against the purchaser of shares cannot in the way of the Authority in giving an Advance Ruling  under section 245 R (4 ).	Groupe Industrial Marcel Dassault, in Re	64 DTR 1 (AAR).
7	The applicant is a public sector company. It has entered in to an offshore services contract with  Atomstroy Export Russia(ASE) for setting up a power plant in the State of Tamil Nadu. According to  the applicant, the income from such contracts is taxable under section 44BBB of the Act. It had  entered in to four contracts with ASE. The applicant stated that it was assessed to tax for the years 2006‐07 and 2007‐08 pursuant to the directions of the Dispute Resolution Panel and it was held  that payments received by ASE, under off shore services are covered by section 44BBB. The  applicant approached the Authority for a ruling on the question “whether ASE is chargeable to tax as per the Act or under the Double Avoidance Convention between India and Russia in respect of  the payment made by NPCIL to ASE under off shore supply contracts”. The Authority held that since  the question whether the payment made under the transaction was chargeable to tax under the Act  was pending before the authorities under the Act arising out of an assessment against, before the  applicant approached the Authority seeking ruling to know its Tax deducted at source obligations,  hence the application is barred by clause (i) of the proviso to section 245R(2).	Nuclear Power Corporation of India Ltd.	65 DTR 99
8	When the issue is pending in appeal, application for Advance Ruling is not maintainable. On facts it  was found that the decision of Assessing Officer whether tax to be deducted on payment to nonresident  was challenged before the Authorities and was pending hence the Authority held that  application is not maintainable.	Foster Pte. Ltd.	340 ITR 246 (AAR)
9	Application of the assessee was not admitted on the ground that return filed by assessee and  therefore matter pending before Assessing Officer. Assessee filed the  ectification application based  on certain observation in the hand book published by the Authority for Advance Rulings. The  Authority for Advance Rulings held that Hand Book cannot control the rendering a decision with  reference to the relevant provisions. It also clarified that the Hand Book referred the situation where a notice is issued calling upon the applicant to file a return. It does not deal with a situation where a return has been filed with in time allowed under section 139(1). Accordingly the Authority has not entertained the application for rectification of mistake and dismissed the application.	SepcoIII Electronic Power Construction	340 ITR 231 (AAR)
10.	The applicant filed the return of income under section 139(1) of the Act on 30th September , 2009 . The  transaction based on which rulings on various questions are sought, was entered in to on 24th Nov , 2008 . The application for advance ruling was filed on 21st May 2010.The Authority for advance ruling held that by filing a return , an assessee invites adjudication on all the questions arising out of that return and, therefore if the answer to the question arising before the Authority for advance ruling is involved in the return filed or would arise out of return , bar of proviso to section 245R(2) is attracted ,  hence the date of filing of return is the relevant date to consider the applicability of the proviso to section 245R(2), accordingly the application was held to be barred and dismissed.	Wave Field Inseis ASA, In re.	248 CTR 27 (AAR)