February 2014
[2014] 41 taxmann.com 207 (AAR) Aircom International Ltd., United Kingdom, In re Dated: 10th January 2014
By Geeta Jani, Dhishat B. Mehta, Chartered Accountants
fiogf49gjkf0d
Section 245R(2) of the Act – where scrutiny notice u/s. 143(2) of the Act is issued after the date of filing of application before the AAR, bar in section 245R(2) is not attracted.
Facts:
The Applicant was a company incorporated in the UK. The Applicant had a wholly owned subsidiary in India (“ICo”) that was engaged in the business of software, sales and consultancy in the area of tele-communications. The Applicant entered into Management Services Agreement (“MSA”) with ICo. ICo had made certain payments under the MSA to the Applicant.
The Applicant applied to the AAR for its ruling on the assessibility of the payments received from ICo.
While ICo had filed the return of its income before the application was made by the Applicant to the AAR, the AO of ICo had issued the notice u/s. 143(2) of the Act to ICo after the application was filed before the AAR.
Held:
Following the ruling in Hyosung Corporation Korea, In re, [2013] 36 taxmann.com 150 (AAR), the AAR held that mere filing of the return of income does not attract the bar on the admission of the application as provided in section 245R(2) of the Act. The question raised in the application can be considered as pending for adjudication before the tax authority only when issues are referred to in the return and notice u/s 143(2) is issued.
