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2016 (2) TMI 575 - HC - Income TaxAdvance Rulings - Constitutional validity of clause (i) of the proviso to 245R (2) - When can a question be stated to be 'pending'? - whether the said provision is discriminatory and violative of Article 14 of the Constitution of India as well Article 25 of the Double Taxation Avoidance Agreement (‘DTAA’) between India and the Republic of South Korea? - Held that:- Article 45 of the DTAA mandates that the Petitioner as a South Korean entity should not be subject to any taxation requirement which is more burdensome than the requirement to which an Indian entity is subject. Section 90 (2) of the Act mandates that where any provision of the Act is more beneficial to an Assessee than a provision of the DTAA, then the provision of the Act shall apply. It is not understood how clause (i) of the proviso to Section 245R of the Act can be said to be more beneficial to the Petitioner even if the discriminatory portion which exempts Central Government notified PSUs from its ambit is invalidated. Even if the offending portion is invalidated, the result would be that in terms of clause (i) of the proviso to Section 245R(2) of the Act, the bar would apply equally to both a resident and a non-resident. In other words, the provision would become equally burdensome to both a resident and a non-resident. Consequently, neither Article 25 of the DTAA can come to the aid of the Petitioner. For all of the aforementioned reasons, the Court finds that it serves no purpose, and certainly not that of the Petitioner, to pronounce on the validity of the portion of clause (i) of Section 245R(2) of the Act, that exempts resident PSUs from the bar of that provision, to be violative of Article 14 of the Constitution. Therefore, the Court declines the prayer to declare clause (i) of the proviso to Section 245 R (2) of the Act to be violative of Article 14 of the Constitution. The applications filed by the Petitioner in respect of the transaction of supply of equipment for AY 2008-09 and 2009-10 were rightly rejected by the AAR since on the date of filing of such applications before the AAR, the question raised therein was already pending before the income tax authorities by virtue of the notices under Section 142 (1) of the Act having already been issued to the Petitioner. However as regards the three applications concerning the supply contracts executed during AY 2010-11, the AAR erred in rejecting them by applying clause (i) to proviso to Section 245R(2) of the Act. Notices under Section 142(1) of the Act in respect of those transactions pertaining to AY 2010-11 were issued only after the filing of the application before the AAR.
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