AUTHORITY FOR ADVANCE RULINGS (INCOME - TAX)
- With a view to avoid a dispute in respect of assessment of income tax liability in the case of a non-resident (and also specified categories of residents) a Scheme on Advance Ruling was incorporated in Chapter XIX-B of the Income Tax Act. The Authority for Advance Ruling (AAR) pronounce rulings on the applications of the non-resident/residents submitted in the
prescribed form following prescribed procedure and such rulings are binding both on the applicant and the income tax department. Thus, the applicant can avoid expensive and time-
consuming litigation on any question of law or fact, which might arise from normal income tax assessment proceedings. AAR (Procedure) Rules, 1996 provide detailed procedure for obtaining advance rulings. - The Authority consist of a retired Judge of Supreme Court as Chairman and two Members, one an officer of Indian Revenue Service equivalent to Member of CBDT and second an officer of Indian Legal Service of the rank of Additional Secretary as Member.
- Any Non-Resident person whether individual, Company, firm, association of persons or other body corporate can make an application for seeking an advance ruling in regard to his/its tax liability. Similarly, certain category on residents can also seek advance rulings
A- For Non Residents
For determination, in relation to a transaction which had been undertaken or is proposed to be undertaken by a Non-resident applicant on any question of law or fact specified in the application.
B- For Residents
A resident who has undertaken or proposes to undertake a transaction with a non-resident may seek a ruling for determination on any question of law or fact in relation to such transaction involving the tax liability of the non-resident.
II. A resident falling within notified categories may seek determination or decision by the Authority in respect of an issue relating to computation of total income which is pending before any Income Tax Authority or the Appellant Tribunal and such determination or decision shall include the determination or decision of any question of law or fact relating to such computation of total income.
(Central Government vide Notification No.11456 dated 3.8.2000 has specified public sector company as defined in clause (36A) of section 2 of the Income Tax Act being such class of persons under section 245N(b)(iii) of Chapter XIX B of the act.)
4. 35 posts in various grades including one post of Commissioner of Income-tax and two posts of Additional/Joint Commissioner of Income-tax (Group 'A') have been created to assist the Authority in performing its work.
