Procedure of making application for advance ruling under Income Tax Act, 1961
Provisions related to Advance Ruling under Income Tax Act, 1961 are contained in section 245N – 245V. For brief contents of the section, you can read here.
Authority for Advance Rulings (Procedure) Rules, 1996 had been framed under powers conferred by section 245V of Income-tax Act, 1961. An applicant can make application by submitting a duly signed copy of the application. Such application should be signed by the applicant or by the person authorized to sign under Rule 44E of the Income-tax Rules, 1962. The application is made in quadruplicate along with a Bank Draft of ₹ 2,500/-. Bank Draft should be made in favor of the Authority for Advance Rulings payable at Delhi.
There are three different forms for different categories of applicants. Form 34C is for non-residents, Form 34D is for residents entering into a transaction with non-residents and Form 34E is for Public Sector Undertakings. These forms are accompanied by two Annexures.
Annexure-I is for “Statement of the relevant facts having a bearing on the question(s) on which the advance ruling is required”.
Annexure-II is for “Statement containing the applicant’s interpretation of law or facts, as the case may be, in respect of the question(s) on which advance ruling is required”.
Applications can be downloaded from links given below:
Applications filled correctly should be sent through Registered Post at the following address:
Authority for Advance Rulings (Income-Tax),
5th Floor NDMC Building,
Satya Marg, Yashwant Place,
Chanakyapuri, New Delhi – 110021.
Applications can also be submitted in person at the above-mentioned address. On submitting in person, you should take an extra copy. On such extra copy, you should take receiving-stamp (for personal use and is useful for future references).
Contact Details of AAR, Delhi
(PBX – +91-011-26117792, 26117802)
Email : email@example.com
Some Important Frequently Asked Queries
Query 1 – How long will AAR take to pronounce its rulings?
Ans. – Authority for Advance Ruling is bound to pronounce its ruling within six months.
Query 2 – Can Applicant withdraw their applications?
Ans. – Yes, Applicants can withdraw their applications within 30 days. If Authority is satisfied with the reasons, it can allow applicants to withdraw applications even after 30 days.
Query 3 – Can Applicants make applications for cases pending with Appeals or Tribunals?
Ans. – No, the only single remedy is available. Applicants can either proceed with Authority for Advance Ruling or with Appeals and Tribunals. However, Central Government has authority to notify such classes of person who can apply to AAR even if their cases are pending in Appeals or Tribunals. Details regarding Provisions under Income-tax Act for Advance Ruling and such notified classes of persons can be found here.
Query 4 – Can Applicants Challenge Rulings from AAR?
Ans. – No. Rulings from Authority for Advance Ruling are binding upon Income Tax Authorities and to such person who has sought it. This ruling is binding for such transactions only for which it is sought. The ruling is binding unless the law in this regard is changed or facts on which such ruling is obtained is changed.
However, applicants always have the option of the writ petition in terms article 226 and 227 of the Indian Constitution. Similarly, they can file their petition to Supreme Court too. These remedies are in all cases as Indian Constitution has guaranteed this right to justice. But, there is no right to challenge rulings under Income-tax Act. It can only be challenged in High Courts and Supreme Courts through writ petitions.
Query 5 – When to make application to AAR and for what issues?
Ans. – An application can be made either before entering into the transaction or after entering into the transaction. However, for own interest, it is advisable to make an application as soon as possible. If you are sure to enter into transactions, it’s wise to make application beforehand to get a faster ruling.
Generally, but not limited to this list, Applications can be made for transactions and cases related to –
- Issues related to DTAAs, e.g. determination of tax residence in any specific circumstances
- Taxation problems for international ventures with Indian Person/Entity
- Transfer of Assets to and from India (for issues related to Indian Taxation)
- Transactions entered with residents by non-residents (including for issues related to calculation of taxes by residents to withheld from payment to such non-residents)
For details, you are advised to read the handout on Advance Ruling and provisions in this regard. Links are given in the last Query at this page.
Query 6 – Who can make application and can it be denied?
Ans. – Non-residents and certain classes of residents can make applications. For details, view this page. Regarding the second question, yes it can be denied in a case where Authority is of view that application is being made with intentions of tax avoidance or as a delay tactics. However, those classes of residents that are notified by Central Government can always make applications. Details about such notified classes of persons can be viewed from the above-mentioned page.
Query 7 – Are information inside application kept confidential?
Ans. – Yes, proceedings of Authority for Advance Ruling are non-public. They are not shared in the public domain and no one other than those authorized are allowed to view proceedings. Only rulings are pronounced and hosted on the public domain.
Query 8 – Where are ruling published?
Ans. – Rulings from AAR are published on the website of Authority for Advance Ruling. The web address is https://aar.gov.in.
Query 9 – How to obtain detailed information in this regard?
Ans. – You can use below links to get complete information in this regard.
For Provision related – Click here.
To download Handbook released by Authority for Advance Ruling, click here.