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No bar in approaching AAR on taxability issue even if identical receipts offered to tax in earlier years

February 20, 2021[2021] 124 taxmann.com 409 (AAR - New Delhi)
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INTERNATIONAL TAXATION : There is no bar under provisions of Act to approach Advance Rulings Authority to decide issue of taxability; even if identical receipts were offered to tax by applicant in earlier year(s)

• Services rendered by Applicant in 2017 agreement were identical with all services under section 2013 agreements. Applicant had offered amount received under earlier 2013 agreement as royalty/FTS in returns filed with department. Revenue's case is that when applicant had itself offered receipt for services as per earlier agreement to tax, instant application for advance rulings would be on change of opinion.

Held, that there is no bar under provisions of Act to approach Advance Rulings Authority to decide issue of taxability even if identical receipts were offered to tax by applicant in earlier year(s). There is no stipulation in proviso to section 245R that if application is based on change of opinion, such application cannot be admitted. What is relevant to consider is whether such change of opinion renders issue as 'pending' before Income-tax Authority for earlier year(s). Issue can be said to be pending before Income-tax Authority only when return is selected for scrutiny to examine change of stand by assessee or where such change of opinion is examined by Income-tax Authority and a considered view regarding such change of opinion is taken after such examination. When examined on these parameters, matter can't be said to be pending before Income-tax authority because return for relevant assessment year 2016-17 was not selected for scrutiny to examine any change of stand in manner of offering of any particular income. Return for assessment year 2016-17 was not selected to examine any change of stand by the appellant. Therefore, there is no pendency in respect of the questions raised in the present application before the Income-tax Authority. Further, as the applicant had already offered the amount for services rendered as royalty/FTS in the return for assessment year 2016-17 there was no occasion for the Assessing Officer to examine this change of stand. Therefore, it cannot be held that the change of opinion on the part of the applicant in the application did not render the issues pending in the assessment year 2016-17. Issues involved in questions raised in application filed before Authority for Advance Rulings was not pending before Income-tax Authority, in terms of clause (i) of proviso to section 245R(2) was not attracted. Therefore, application is admitted under section 245R(2).

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