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2014 (1) TMI 607 - AAR - Income TaxAdmissibility of application u/s 245R - Held that - Only when the issues are shown in the return and notice under section 143(2) is issued, the question raised in the application will be considered as pending for adjudication before the Income-tax Authorities - In the case of assessee company - Not only return of income was filed but even notices under section 143(2) and 142(1) were already issued before filing of the application - Return of income for the relevant assessment year was filed on 30.9.2008 and a revised return was filed on 31.3.2010 i.e. before filing the application to the Authority for Advance Rulings on 19.5.2011 - Notice under section 143(2) was issued on 20.9.2010 which was before filing the application - The assessment was also completed under section 143(3) of the Act by the Assessing Officer on 1.2.2012 It is clear that the question was already pending before the Income-tax Authorities and the application is barred by Proviso (1) of section 245R(2) of the Act Decided against assessee.
Issues:
1) Whether the cost recouped by the Applicant from MCPL for the connectivity provided by BT UK is in the nature of reimbursement of expenses and not subject to tax in India? 2) If the answer to Question 1 is negative, whether the cost recouped by the Applicant from MCPL would be considered as royalties or fees for technical services under the Indo-UK DTAA or the Income Tax Act, 1961? 3) If the answer to Question 1 is negative, would the cost recouped by the Applicant from MCPL be chargeable as business profits in India? 4) Whether there is an obligation for MCPL to deduct taxes at source and at what rate? Analysis: 1) The Revenue objected to the application's admissibility, arguing that the return of income was filed before the application, making it pending before the Income-tax Authority, thus barred by the proviso to section 245R(2) of the Act. The applicant contended that the mere filing of a return does not bar the application unless the issue raised is pending for adjudication. The Authority clarified that the Revenue lacks jurisdiction to examine issues beyond those mentioned in Section 143(1) of the Act, emphasizing that debatable issues cannot be adjudicated without a notice under section 143(2). The decision in previous cases supported the view that filing a return does not automatically invite adjudication of all questions raised in the return. 2) The Authority further explained that by issuing a notice under section 143(2), the Assessing Officer gains jurisdiction to adjudicate all questions arising from the return. The case of Jagtar Singh Purewal highlighted that if no dispute exists between the applicant and the department due to the return being processed under section 143(1) and a refund granted, the application for advance ruling remains maintainable. In the present case, the return of income was filed, notices under sections 143(2) and 142(1) were issued before the application, and the assessment was completed. The Authority agreed with the Revenue that the question was pending before the Income-tax Authorities, leading to the rejection of the application. 3) In conclusion, the application was not admitted and subsequently rejected due to the pending nature of the issue before the Income-tax Authorities, as evidenced by the filing of returns and issuance of notices before the application was submitted.
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