TMI Blog2012 (8) TMI 105X X X X Extracts X X X X X X X X Extracts X X X X ..... exercise judicial superintendence over the decisions of all courts and tribunals within their respective jurisdictions is part of the basic structure of the Constitution. Therefore, to hold that an advance ruling of the authority should not be permitted to be challenged before the High Court under Articles 226 and/or 227 of the Constitution would be to negate a part of the basic structure of the Constitution - no substantial question of general importance arises in SLP - dispose of this SLP granting liberty to the petitioner to move the appropriate High Court under Article 226 and/or 227 of the Constitution. - SLP (C) No. 31543, 3318, 13760, of 2011 & CIVIL APPEAL No. 2996 5839, 7035, of 2008, 6987 of 2010, & 10064, 11327 of 2011, - - - Dated:- 30-7-2012 - S.H. Kapadia A. K. Patnaik, Swatanter Kumar JJ. O R D E R A. K. PATNAIK, J. SPECIAL LEAVE PETITION (C) No. 31543 of 2011: This is a petition under Article 136 of the Constitution of India seeking special leave to appeal against the order dated 08.08.2011 of the Authority for Advance Rulings (Income Tax) constituted under Chapter XIX-B of the Income Tax Act, 1961 (for short 'the Act') in A.A.R. No.862 of 2009 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in India for the purpose of export' as stated in part (b) of Explanation 1 to Section 9(1)(i) of the Act? 4. If the answer to Query 3 is in the negative, how would the profits attributable to the 'operations in India' be determined and what would be the broad principles to be borne in mind for attributing income to the India LO? 5. Whether the India LO creates a permanent establishment ['PE'] for the Applicant in India under Article 5(1) of the Agreement for Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income and Capital Gains entered into between the Government of the Republic of India and the Government of the United States of America ['Treaty'] read with the PE exclusion available for purchase function in terms of paragraph 3(d) of Article 5 of the Treaty? 6. If the answer to Query 5 is in the affirmative, how would the profits attributable to the PE in India be determined and what would be the broad principles to be borne in mind for attributing income to India LO under the Treaty?' 4. The respondent filed his reply dated 10.12.2010 to the aforesaid application of the petitioner before the Authority. The petitioner also filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , decline to interfere with the order passed by the Authority in exercise of its powers under Article 136 of the Constitution where it feels that it would be more appropriate that the order of the Authority must first be examined by the High Court under Article 226/227 of the Constitution. They relied upon the decision of this Court in Durga Shankar Mehta v. Thakur Raghuraj Singh and Others [(1955) 1 SCR 267] in which it has been held that the expression "Tribunal" used in Article 136 of the Constitution includes, within its ambit all adjudicating bodies, provided they are created by the State and are invested with judicial as distinguished from purely administrative or executive functions. They cited the decisions of this Court in Kihoto Hollohan v. Zachillhu and Others [1992 Supp (2) SCC 651], Jyotendrasinhji v. S.I. Tripathi and Others [1993 Supp (3) SCC 389], L. Chandra Kumar v. Union of India and Others [(1997) 3 SCC 261] and Union of India v. R. Gandhi, President, Madras Bar Association [(2010) 11 SCC 1] in support of their submission that where a tribunal is constituted by an Act of the legislature for adjudicating any particular matter, the power of the constitutional court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 233 to 237 or in the Lists, it contemplates Courts of Civil Judicature but not tribunals other than such Courts. This is the reason for using both the expressions in Arts. 136 and 227. By "Courts" is meant Courts of Civil Judicature and by "tribunals", those bodies of men who are appointed to decide controversies arising under certain special laws. Among the powers of the State is included the power to decide such controversies. This is undoubtedly one of the attributes of the State, and is aptly called the judicial power of the State. In the exercise of this power, a clear division is thus noticeable. Broadly speaking, certain special matters go before tribunals, and the residue goes before the ordinary Courts of Civil Judicature. Their procedures may differ, but the functions are not essentially different. What distinguishes them has never been successfully established....." Thus, the test for determining whether a body is a tribunal or not is to find out whether it is vested with the judicial power of the State by any law to pronounce upon rights or liabilities arising out of some special law and this test has been reiterated by this Court in Jaswant Sugar Mills Ltd. v. Lakshm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied in the application. Further, the Authority may make a determination or decision in respect of a issue relating to the computation of total income which is pending before any income-tax authority or the Appellate Tribunal and such determination or decision may include the determination or decision of any question of law or of fact relating to such computation of total income specified in the application. Thus, the Authority may determine not only a transaction but also the tax liability arising out of a transaction and such determination may include a determination of issue of fact or issue of law. Moreover, the Authority may determine the quantum of income and such determination may include a determination on a issue of fact or issue of law. 9. We also find that the determination of the Authority is not just advisory but binding. Section 245S in Chapter XIX-B is quoted hereunder: "245S. (1) The advance ruling pronounced by the Authority under section 245R shall be binding only- (a) on the applicant who had sought it; (b) in respect of the transaction in relation to which the ruling had been sought; and (c) on the Commissioner, and the income-tax authorities subordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s book "Constitutional Law of India" (Forth Edition) while discussing the tests for identifying judicial functions in paragraph 16.99 quotes the following passage from Prof. de Smiths Judicial Review on page 1502: "An authority acts in a judicial capacity when, after investigation and deliberation, it performs an act or makes a decision that is binding and collusive and imposes obligation upon or affects the rights of individuals." We have, therefore, no doubt in our mind that the Authority is a body exercising judicial power conferred on it by Chapter XIX-B of the Act and is a tribunal within the meaning of the expression in Articles 136 and 227 of the Constitution. 11. The fact that sub-section (1) of Section 245S makes the advance ruling pronounced by the Authority binding on the applicant, in respect of the transaction and on the Commissioner and the income-tax authorities subordinate to him in respect of the applicant and the transaction would not affect the jurisdiction of either this Court under Article 136 of the Constitution or of the High Courts under Articles 226 and 227 of the Constitution to entertain a challenge to the advance ruling pronounced by the Authority. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... however, observed: "..... But permitting a challenge in the High Court would become counter productive since writ petitions are likely to be pending in High Courts for years and in the case of some High Courts, even in Letters Patent Appeals and then again in the Supreme Court. It appears to be appropriate to point out that considering the object of giving an advance ruling expeditiously, it would be consistent with the object sought to be achieved, if the Supreme Court were to entertain an application for Special Leave to appeal directly from a ruling of this Authority, preliminary or final, and render a decision thereon rather than leaving the parties to approach the High Courts for such a challenge. ..." We have considered the aforesaid observations of the Authority but we do not think that we can hold that an advance ruling of the Authority can only be challenged under Article 136 of the Constitution before this Court and not under Articles 226 and/or 227 of the Constitution before the High Court. In L. Chandra Kumar v. Union of India and Others (supra), a Constitution Bench of this Court has held that the power vested in the High Courts to exercise judicial superintendenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Unless, therefore, a Special Leave Petition raises substantial questions of general importance or a similar question is already pending before this Court for decision, this Court does not entertain a Special Leave Petition directly against an order of the tribunal. 14. In this Special Leave Petition, we do not find that a substantial question of general importance arises nor is it shown that a similar question is already pending before this Court for which the petitioner should be permitted to approach this Court directly against the advance ruling of the Authority. We accordingly dispose of this Special Leave Petition granting liberty to the petitioner to move the appropriate High Court under Article 226 and/or 227 of the Constitution. We request the concerned High Court to ensure that the Writ Petition, if filed, is heard by the Division Bench hearing income-tax matters and we request the Division Bench to hear and dispose of the matter as expeditiously as possible. Special Leave Petition (C) No. 3318 of 2011, Special Leave Petition (C) No. 13760 of 2011, Civil Appeal No. 2996 of 2008, Civil Appeal No. 5839 of 2008, Civil Appeal No. 7035 of 2011, Civil Appeal No. 6987 of 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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