AAR cannot be approached for a ruling only on a part of a transaction

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AUTHORITY FOR ADVANCE RULINGS (INCOME-TAX)

ZD, In re

P.K. Balasubramanyan, Chairman, J.

A.A.R. No. 1098 of 2011

June 8, 2012

 

A ruling pronounced by this Authority is binding on the applicant, in respect of the transaction in relation to which the ruling has been sought and on the Commissioner and the income-tax authorities subordinate to him. The ruling is in respect of the applicant and the transaction involved. This shows that this Authority is expected to give a ruling in respect of the transaction ; on the chargeability to tax either under the Act or the DTAC in appropriate cases, so that there will be a binding adjudication on the chargeability to tax under the Act. That, this is the purpose of creating this Authority, is also clear from the object sought to be achieved by the introduction of Chapter XIX-B in the Act, by the Finance Act of 1993. In my view, seeking of a ruling only on a part of a transaction or on a truncated transaction, cannot be said to be proper and in any event is not a practice that ought to be encouraged. The applicant is bound to come forward and seek a ruling on all the relevant aspects of the chargeability to tax, of a transaction and not rest content with raising questions on aspects of the transaction which may suit it.