2017-TII-07-SC-INTL
DCIT Vs SAGE PUBLICATIONS LTD: SUPREME COURT OF INDIA (Dated: February 13, 2017)
Keywords: adjournment application - advance ruling & pendency of proceeding
The assessee, a non-resident corporation, had applied for an advance ruling u/s 245R. The AAR however rejected the same by invoking the proviso to Section 245R(2) and thereby holding that the questions for which reference was made, were part of a pending proceeding. The AAR observed that there was a request for adjournment on the ground of unavailability of the counsel. However, the Department took an objection to this request and pointed out that in this matter there was already a notice issued u/s 143(2). The representative sought time for ascertaining whether such notice was issued or not. However, it was seen by AAR that the concerned party applicant had acknowledged the notice u/s 143(2) and had sought the details in connection with the captioned tax case. AAR held that it was obvious that all the questions would be covered under the said notice u/s 143(2) including the questions raised before this forum. Therefore, there was a complete bar for entertaining the application u/s 245R(2) as there was nothing for the applicant to ascertain.
On appeal, the HC held that it was evident on a plain reading of notice u/s 143(2) 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 AO to issue a scrutiny notice on account of the international transaction reported by the assessee. The previous authority of HC in Hyosung case and L.S. Cable case had the occasion to deal with identical notices, and it was positively ruled that such notices ipso facto would be insufficient to attract the automatic rejection route under proviso to Section 245R(2). Consequently, HC had no hesitation in holding that the impugned order of the Ruling Authority in rejecting the application was untenable.
On further appeal filed by the Revenue, the Apex Court has on the basis of rejection of an SLP (Civil) No.37525 of 2016 having similar issues, confirmed the decision of High Court wherein it has been held that notices issued u/s 143(2) ipso facto are insufficient to attract the automatic rejection route under proviso to Section 245R(2).
Revenue's SLP dismissed