Order passed by the Tax Officer after applying the AAR ruling in petitioner’s own case cannot be revised by the Commissioner based on some other AAR

Writ petition No. 866 of 2010 filed with the Bombay High Court

Prudential Assurance Company Limited (‘the Petitioner’ or ‘the Company’), a sub-account duly registered with the Securities and Exchange Board of India (‘SEBI’) filed a writ petition (Writ petition No. 866 of 2010 ) with the Bombay High Court against the show -cause notice issued under section 263 of the Income Tax Act, 1961  issued by the Commissioner of Income-tax (Commissioner). The Commissioner was seeking to revise an assessment order determined on the basis of a ruling of the Authority for Advance Ruling (‘the AAR’) in the case of Fidelity North star Fund (AAR No. 678/2006).

The Bombay High Court has quashed a show-cause notice issued by the Commissioner and held that the assessment order passed by the Assessing Officer (AO) after applying the AAR ruling in petitioner’s own case, cannot be regarded erroneous or prejudicial to the interests of the tax department.

Further, the High Court also observed that as per section 245S of the Income-tax Act, 1961 (the Act), the ruling in the case of Fidelity North star Fund cannot displace the binding character of the advance ruling rendered between the Petitioner and the tax department.

Facts of the case

Please become a Premium member. If you are already a Premium member, login here to access the full content.