TMI Blog2007 (8) TMI 731X X X X Extracts X X X X X X X X Extracts X X X X ..... d A. SINHA Member V. Ramachandran,Senior Advocate and Ms. Mallika Srinivasan,Advocate, for the Appellant A. N. Pahuja and D. K. Singh, for the Respondent ORDER 1. P. V. Reddi J. (Chairman).-The applicant is an individual who is a resident of Singapore and a non-resident in India. He is the sole proprietor of the business under the name and style of Mustafa Gold Mart at Chennai engaged in the purchase, manufacture and sale of gold jewellery. The applicant is also the managing director of Mustafas Pte. Limited, having its registered office in Singapore. Apart from the business as above, the applicant is also engaged in the activity of purchasing gold jewellery in India for the purpose of export. He also purchases gold for the purpose of export of the converted gold jewellery. It is claimed that this activity is totally unrelated to the sole proprietary business in jewellery carried on by the applicant in Chennai. 2. The applicant has been submitting returns of his business income derived from local sales and export sales with ADIT (International Taxation), Chennai. The returns for the assessment years 2005-06 and 2006-07 were filed on October 30, 2005 and Oc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hase of gold for the purpose of manufacturing gold jewel lery for export and export the same by the applicant who is a non resident would constitute income accruing or arising through or from the operations which are confined to purchase of goods in India for the purpose of export falling within clauses (a) and (b) of Explanation 1 under section 9(1)(i) and whether such income is not taxable in India ? 4. The DIT (International Taxation), Chennai has taken the stand that application is liable to be rejected in terms of the proviso to section 245R(2) of the Income-tax Act. Section 245R(2) reads below : 245R. Procedure on receipt of application.-(1) On receipt of an application, the Authority shall cause a copy thereof to be forwarded to the Commissioner and, if necessary, call upon him to furnish the relevant records : Provided that where any records have been called for by the Authority in any case, such records shall, as soon as possible, be returned to the Commissioner. (2) The Authority may, after examining the application and the records called for, by order, either allow or reject the application : Provided that the Authority shall not allow the application w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g before the assessing authority. He therefore reiterates the stand taken by the DIT as regards the maintainability of the application. 10. We do not think that the embargo laid down in the proviso to section 245R(2) is attracted in the present case. In order to decide whether the question raised in the application is already pending before the Income-tax authority, the crucial point of time to be taken into account is the date on which the application was filed before this Authority. It is on that date, the factual position as regards the pendency of the question has to be decided. If on the date of filing the application, the assessee and the Revenue were at issue as regards the question raised in the application, the bar under the proviso does operate. Viewed from another angle, the Income-tax authority had no means of knowing on the date of filing the application, a question similar to the one raised in the application will come up for consideration before him. In such a situation, it cannot be said that the question was pending before him on the date of filing the application. In Black' s Law Dictionary [Seventh Edition, page 1259]-one of the meanings of the word ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, in view of the claim for exemption made before the Income-tax authorities in the return which is pending consideration by them as on the date of the hearing of this application, this Authority is precluded from dealing with the application in view of the mandate contained in the proviso to section 245R(2). At first sight and on a cursory reading of the above proviso, it might appear that the Authority will have to reject the application as the question sought to be raised before the Authority is ' already pending' i.e., pending as on the date of the hearing and disposal of the application. But this, on second thoughts, would be seen to be not a tenable view. The date on which the Authority hears the application and the date on which it disposes of application may not be the same and the maintainability of the application cannot be made to depend on the pendency of the issue before the Income-tax authorities on varying dates. It would appear more correct and practical to construe the embargo as applicable to cases where, while the issue is already pending before the Income-tax authorities, the Appellate Tribunal or any court, the applicant also seeks recourse under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mber 22, 2004, that mere filing of returns by the applicants would not fall within the mischief of clause (i) referred to above. Where, however, a notice is issued under section 143(2) of the Act, within the statutory period, the situation may warrant an enquiry into the identity of questions before the Assessing Officer and the Authority. In this case admittedly no notice under section 143(2) of the Act is issued to the applicants before the date of filing of these applications before the authority. So we need not delve on this aspect any further. 18. Thus, the Authority for Advance Rulings presided over by Justice S.S.M. Quadri, took the view that unless the filing of return was followed up by issuance of notice under section 143(2) (before the date of filing the application), the question cannot be said to be pending before the assessing authority. In the case on hand, as far as the year 2006-07 is concerned, no notice under section 143(2) was issued up to the date of filing the application. In regard to the earlier year, i.e., 2005-06, as already seen, the question which is raised in the application did not arise at that stage, i.e., at the time of submission of the origina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esentative. The mere fact that the exemption is claimed relying on a particular provision of the Income-tax Act cannot be construed to be a design for avoidance of Income-tax. In order to clamp this bar at the threshold, there must be necessary facts pointing to prima facie inference of a design to avoid tax by illegal or improper means. No facts or circumstances leading to such inference has been placed before us. Hence, we overrule this objection of the learned Departmental Representative. 21. In the light of the foregoing discussion, we are satisfied that the bar under any of the clauses of the proviso to section 245R(2) is not attracted and the application deserves to be allowed for the purpose of pronouncement of advance ruling under sub-section (4) of section 245R. 22. On going through the questions we found that there was some overlapping. When we drew the attention of senior counsel to this, he stated that three questions are sufficient for the purpose of advance ruling and the rest may be treated as deleted. A letter to this effect has also been furnished by the applicant's counsel. The following are the three questions framed : (1) Whether, on the facts and i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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