TMI Blog2019 (10) TMI 1397X X X X Extracts X X X X X X X X Extracts X X X X ..... resent application was already pending before the Income-tax Authority. The general notice as issued in this case is found insufficient to attract the rejection of the application under clause (i) of Proviso to Section 245R(2) It is evident on a plain reading of the notice that it does not address itself to any specific question; it does not even disclose application of mind to the returns save and except the fact that they conform to the instructions which compelled the A.O. to issue a scrutiny notice on account of the international transactions reported by the assessee. In the present case also the notice u/s 143(2) was issued in response to CASS selection reasons. The selection of international transaction on T.P. risk parameter was already referred to the T.P.O. who had passed the order u/s 92CA (3) of the Act dated 26/03/2019, wherein no adverse inference was drawn in respect of the international transactions undertaken by the assessee. The specific question in respect of IT service agreements was never raised by the A.O. in any of the notices or the questionnaire. As held by the Hon'ble Courts such notice can't attract the automatic rejection route under clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Agreement ('the Agreement'), the amount received amounting to INR 31,67,20,806 by the Applicant from Valmet Chennai Private Limited ('Valmet Chennai') and Valmet Automation Private Limited ('Valmet Automation'), for provision of IT support services rendered from Finland, would be deemed to arise in Finland and thus not taxable ion India in view of the provisions of Article 12(5) of the Double Taxation Avoidance Agreement signed between India and Finland ('India-Finland Tax Treaty')? 2. Whether, based on the facts and circumstances of the case and in law, the amount received by the Applicant (included in INR 31,67,20,806 above) from Valmet Chennai and Valmet Automation, for reimbursement of third party cost incurred for providing IT support services without any income element embedded therein, would not be chargeable to tax in India? 3. Based on answers to questions above, would the payments received by the Applicant be subject to deduction of tax at source under section 195 of the Act, and if yes, then what rate of tax would be applicable on such payments? 2. On behalf of the revenue, a preliminary objection was raised that the question ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices to Valmet Chennai and reference to Valmet Automation Private Limited (wherever provided in the application) be ignored. 4. On the issue of pendency, the applicant has admitted that notice under section 143(2) dated 18-7-2017 for the AY 2016-17 was received by it. Further it was submitted that the said notice does not specifically discuss/call for details to analyse the tax liability of income from IT support services. Therefore, mere issuance of notice under section 143(2) of the Act would not result in constituting any 'question' to be pending before the income tax authority. Reliance in this regard was placed on the following decisions: (a) Sage Publication Limited UK (387 ITR 437) (Delhi) (b) LS Cable and System Limited (385 ITR 99) (Delhi) 5. As regarding allegation of the revenue that the present applicant was merely an afterthought designed prima facie for the avoidance of income tax, the applicant submitted that merely because similar income was offered to tax in the past years and accepted as such by the department, would not make such transaction a device for tax avoidance. It was submitted that the applicant was entitled to resile from the positi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicant so also in relation to the tax liability of a non-resident in relation to a transaction, but in each of these applications a series of transactions are involved, therefore, the Authority has no jurisdiction to pronounce ruling in regard to series of transactions. Mr. Nishith Desai, learned counsel appearing for the applicant, has argued that as per section 13 of the General Clauses Act 1897 in all Central Acts and Regulations, words in the singular shall include the plural and vice-versa. We may observe that on the face of it the preliminary objection raised by the Commissioner lacks not only merit but also rationality. After some reluctance Mr. Chopra has given up this objection, we, therefore, do not propose to deal with this aspect any further except to mention that section 13 of the General Clauses Act 1897 is a complete answer to the objection raised by the Commissioner. 7. The provision of section 13 of General Clauses Act read with Rule 44E(4) of IT Rules and CBDT OM dated 28th August, 2019 makes it evident that more than one transaction can be included in one application. However, a question may arise whether an applicant can file one application in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Reason Code Reason Description Issue Underlying Information Elements Rationale TP02.01 International transaction(s) in respect of intangible property (T.P. Risk Parameter) (Form 3CEB) (S. No. 12, Form 3CEB) Whether value of international transactions in respect of intangible property are correctly shown in Form 3CEB and return of income BR01.01 Tax credit claimed in ITR is less than tax credit available in 26AS (26AS and Part B- TT1 of ITR) (Verification of corresponding receipts/investments) Whether sales turnover/receipt has been correctly offered for tax 9. From the CASS Selection reason, it is found that the return was selected for scrutiny to examine whether the value of international transaction in respect of intangible property was correctly shown in Form 3CEB and return of income and whether sales turnover/receipt was correctly offered for tax. These reasons do not indicate that the question as raised in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. Consequently, the mere fact that such a notice was issued prior to the filing of the application by the Petitioner before the AAR will not constitute a bar, in terms of clause (i) to proviso to Section 245R(2) of the Act, on the AAR entertaining and allowing the applications. 11. In the instant case also the notice was issued in a standard pre-printed format and the specific issue as appearing in this application was not part of the said notice. The Hon'ble Delhi High Court has also held in the case of Sage Publications Ltd, U.K. (387 ITR 437) that issue of notice u/s 143(2) even prior to filing of application before A.A.R. ipso facto would be insufficient to attract automatic rejection of said application under proviso to section 245R(2) of the Act and the SLP filed against this decision was dismissed by the Apex Court. In this case, the Hon'ble High Court had observed as under: It is evident on a plain reading of the notice that it does not address itself to any specific question; it does not even disclose application of mind to the returns save and except the fact that they conform to the instructions which compelled the A.O. to issue a scrutiny notice on ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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