ARA can not be accepted if question raised in application is already pending before any authority

In Re Nuclear Power Corporation of India Ltd. (AAR) – Since the question whether the payment made under the transaction was chargeable to tax under the Act was pending before the authorities under the Act arising out of an assessment against ASE, before the applicant approached this Authority the allowing of this application under Section 245R(2) of the Act is barred. The bar is in entertaining an application where the question raised in the application is already pending before any income-tax authority. Since we have found that the question arising before us, the primary question, if not the only question, is whether the payment to be made by the applicant to ASE on the transaction(s) is chargeable under the Act is already pending in proceedings against the payee, ASE, entertainment of the present application is barred by clause (i) of the proviso to Section 245R(2) of the Act. We, therefore, reject the application.

BEFORE THE AUTHORITY FOR ADVANCE RULINGS (INCOME  TAX) NEW DELHI

21^st December, 2011

A.A.R. No. 1011 of 2010

Name & address of the applicant- Nuclear Power Corporation of India Ltd.

Commissioner concerned – Commissioner of Income-tax, (Large Tax Payer Unit), Mumbai.

O R D E R

1. The applicant before us is the Nuclear Power Corporation of India Limited (NPCIL). It is a company incorporated in India. It is a Public Sector Company. It has approached this Authority under section 245Q(1) of the Income-tax Act, 1961 (hereinafter referred to as ^„the Act^‟) on the basis that it has entered into an offshore Services Contract with M/s. Atoms troy Export Russia, (ASE) for setting up a power plant in the State of Tamil Nadu. According to the applicant, the income from such contracts is taxable under section 44BBB of the Act. It had also entered into four Offshore Supply Contracts with ASE. As per those contracts, the equipment and materials were to be sold outside India and the payments were also made outside India. No one connected with ASE who was present in India was involved in the activities associated with the offshore supply of such goods. The sales were on principal to principal basis. According to the applicant, the payments received by ASE under these supply contracts were not taxable in India. Under the Offshore Services and Offshore Supply Contracts, ASE is to make the payment of taxes in India and the applicant, the customer, was to reimburse the amounts to ASE.

2. The applicant has pleaded that ASE was assessed to tax for the years 2006-07 and 2007-08 pursuant to the directions of the Dispute Resolution Panel and it was held that payments received by ASE under Offshore Services Contracts are covered by Section 44BBB of the Act and payments received by ASE in respect of Offshore Supplies Contracts are also covered by Section 44BBB of the Act.