Advance Rulings

Introduction
With a view to avoiding a dispute in respect of assessment of income-tax liability, a Scheme of Advance Ruling has been introduced in the Indian Income Tax Act under Chapter No. XIX B. The Authority of Advance Ruling (Procedure) Rules,1996 provide detailed procedure for obtaining advance ruling.

Advance Ruling means - Section 245N(a)

• a determination by the Authority in relation to a transaction which has been undertaken or is proposed to be undertaken by a non-resident applicant ; or
• a determination by the Authority in relation to a transaction which has been undertaken or is proposed to be undertaken by a resident applicant with a non-resident, and such determination shall include the determination of any question of law or of fact specified in the application ; or
• a determination or decision by the Authority in respect of an issue relating to computation of total income which is pending before any of the income-tax authority or the Appellate Tribunal and such determination or decision shall include the determination or decision of question of law or of fact relating to such computation of total income specified in the application:

Applicant means any person who - Section 245N(b)

• is a non-resident referred to in (i) above ; or
• is a resident referred to in (ii) above ; or
• is a resident falling within any such class or category of persons as the Central Government may, by notification in the Official Gazette, specify in this behalf; and
• makes an application under section 245Q (1) of the Income Tax Act, 1961.

  The Central Government has specified the class of persons for purposes of clause iii above

  • Public Sector Company as defined under section 2(36A) of the Income Tax Act, 1961.
  • Person seeking advance ruling in relation to the tax liability of a non-resident arising out of a transaction undertaken or proposed to be undertaken by him with a non-resident.

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