In the last article, we have discussed the “Concept of Advance Ruling under Income Tax Act’ 1961.” We have already discussed who can seek the advance ruling. In this article, we will discuss how to make an application before the AAR for seeking the advance ruling. This article will discuss in details the Forms applicable for Advance Ruling, Fees for filing the application, verification or the person authorised to sign the application and clauses for withdrawal of application.
Page Contents
- Application for Advance Ruling under Income Tax Act 1961:
- Questions on which Advance Ruling can be sought:
- Form for Filing Advance Ruling Application under Income Tax Act, 1961:
- Fees for filing Advance Ruling Application under Income Tax Act, 1961
- Signing of Application for Advance Ruling Application under Income Tax Act, 1961
- Withdrawal of Application for or Advance Ruling Application under Income Tax Act, 1961
Application for Advance Ruling under Income Tax Act 1961:
The applicant desirous of obtaining advance ruling may make an application stating the question on which advance ruling is sought.
Questions on which Advance Ruling can be sought:
1. Even though the word used in the definition is “question”, it is clear that the non-resident can raise more than one question in one application. This has been made amply clear by Column No. 8 of the form of application for obtaining an advance ruling (Form No. 34C)
2. Though the word “question” is unqualified, it is only proper to read it as a reference to questions of law or fact, pertaining to the income tax liability of the non-resident qua the transaction undertaken or proposed to be undertaken.
3. The question may be on points of law as well as on facts; therefore, mixed questions of law and fact can also be included in the application. The questions should be so drafted that each question can be replied in brief answer. This may need breaking-up of the complex question into two or more simple questions.
4. The questions should arise out of the statement of facts given with the application. No ruling will be given on a purely hypothetical question. A question not specified in the application cannot be urged. Normally a question is not allowed to be amended but in deserving cases, the Authority may allow the amendment to one or more questions.
5. Subject to the limitations, the question may relate to any aspect of the non-resident’s liability including international aspects and aspects governed by double tax agreements. The questions may even cover aspects of allied laws that may have a bearing on tax liability such as the law of contracts, the law of trusts and the like, but the question must have a direct bearing on and nexus with the interpretation of the Indian Income-tax Act.
6. Advance Rulings can be obtained to determine whether an arrangement, which is proposed to be undertaken by any person being a resident or a non-resident, is an impermissible avoidance arrangement as referred to in Chapter X-A or not (General Anti Avoidance Rules).
Form for Filing Advance Ruling Application under Income Tax Act, 1961:
The applicant may seek the advance ruling by making an application to the Authority in the prescribed form.
Rule-44E of the Income Tax Rules’1962 prescribes forms for filing the application. The application shall be made in quadruplicate in the below-prescribed forms:
| Applicant | Prescribed Form |
| Non-Resident Applicant. | Form No.34C |
| The resident having transactions with a non-resident. | Form 34D |
| A resident applicant referred to in sub-clause (iia) of clause (a) of section 245N falling within any such class or category of person as notified by the Central Government in exercise of the powers conferred by item (III) of sub-clause (A) of clause (b) of section 245N | Form No.34DA |
| A resident falling within any such class or category of person as notified by the Central Government in exercise of the powers conferred by item (IV) of sub-clause (A) of clause (b) of section 245N | Form No.34E |
| An applicant referred to in item (V) of sub-clause (A) of clause (b) of section 245N | Form No.34EA |
Fees for filing Advance Ruling Application under Income Tax Act, 1961
The application shall be accompanied by a fee of ten thousand rupees or such fee as may be prescribed in this behalf, whichever is higher.
Rule 44E of the Income Tax Rules’1962 prescribes fees payable while making the application before the authority for the advance ruling. The fees payable along with the application for the advance ruling shall be in accordance with the following table:
| A non-resident applicant.
OR A resident seeking the advance ruling in relation to the tax liability of a non-resident arising out of transaction undertaken or proposed to be undertaken by him with a non-resident. OR A resident applicant referred to in sub-clause (iia) of clause (a) of section 245N falling within any such class or category of person as notified by the Central Government in exercise of the powers conferred by item (III) of sub-clause (A) of clause (b) of section 245N |
Amount of one or more transaction entered into or proposed to be undertaken, in respect of which ruling is sought does not exceed Rs. 100 crore. | Rs. 2 Lacs |
| Amount of one or more transaction entered into or proposed to be undertaken, in respect of which ruling is sought exceeds Rs. 100 crore but does not exceed Rs. 300 crore. | Rs. 5 Lacs | |
| Amount of one or more transaction entered into or proposed to be undertaken, in respect of which ruling is sought exceeds Rs. 300 crore. | Rs. 10 Lacs | |
| Any other applicant | In all cases | Rs. 10,000 |
The application is to be accompanied by an account-payee demand draft for 10,000 Indian rupees drawn in favor of the Authority for Advance Ruling and made payable at New Delhi.
Signing of Application for Advance Ruling Application under Income Tax Act, 1961
The application for Advance Ruling Application under Income Tax Act, 1961, the verification appended thereto, the annexures to the said application and the statements and documents accompanying it, shall be signed.
| Applicant | Signing Authority |
| Individual | – By the individual himself.
– If individual is unable to sign, the person duly holding Power of Attorney from the individual to do so. Power of Attorney shall also be attached to the application. |
| Hindu Undivided Family | – By the Karta.
– Where it is not possible for the karta to sign the application, by any other adult member of such family. |
| Company | – By the Managing Director
– Where there is no managing director, by any director thereof. – Where it is not possible by Managing Director and director, by any person duly authorized by the company in this behalf. Power of Attorney shall also be attached to the application. |
| Firm | – By Managing Partner.
– Where there is no managing partner, by any partner thereof, not being a minor. |
| Association of Persons | – By any member of the association or the principal officer thereof. |
| Any Other Person | – By that person or by some person competent to act on his behalf. |
Withdrawal of Application for or Advance Ruling Application under Income Tax Act, 1961
An applicant may withdraw an application within thirty days from the date of the application.
(Republished with Amendments)
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