The Income-Tax Act, 1961

¹[Chapter XIX-B

Advance Rulings

245N. Definitions.-

In this Chapter, unless the context otherwise requires,-

²[(a) "advance ruling" means-

(i) 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

(ii) a determination by the Authority in relation to the ³[tax liability of a non-resident arising out of] a transaction which has been undertaken or is proposed to be undertaken by a resident applicant with ⁴[such non-resident]; ⁵[or]

⁵[(iia) a determination by the Authority in relation to the tax liability of a resident applicant, arising out of a transaction which has been undertaken or is proposed to be undertaken by such applicant,] and such determination shall include the determination of any question of law or of fact specified in the application;

(iii) a determination or decision by the Authority in respect of an issue relating to computation of total income which is pending before any income-tax authority or the Appellate Tribunal and such determination or decision shall include the determination or decision of any question of law or of fact relating to such computation of total income specified in the application;

¹[(iv) a determination or decision by the Authority 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:]

²[Provided that where an advance ruling has been pronounced, before the date on which the Finance Act, 2003 receives the assent of the President, by the Authority in respect of an application by a resident applicant referred to in sub-clause (ii) of this clause as it stood immediately before such date, such ruling shall be binding on the persons specified in section 245S;]

³[(b) "applicant" means-

(A) any person who-

(I) is a non-resident referred to in sub-clause (i)of clause(a);or

(II) is a resident referred to in sub-clause(ii)of clause(a); or

(III) is a resident referred to in sub-clause (iia) of clause (a) falling within any such class or category of persons as the Central Government may, by notification in the Official Gazette, specify; or

(IV) 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; or

(V) is referred to in sub-clause (iv) of clause (a), and makes an application under sub-section (1) of section 245Q;

(B) an applicant as defined in clause (c) of section 28E of the Customs Act, 1962 (52 of 1962);

(C) an applicant as defined in clause (c) of section 23A of the Central Excise Act, 1944 (1 of 1944);

(D) an applicant as defined in clause (b) of section 96A of the Finance Act, 1994 (32 of 1994);]]

(c) "application" means an application made to the Authority under sub-section (1) of section 245Q;

(d) "Authority" means the Authority for Advance Rulings constituted under section 245-O;

(e) "Chairman" means the Chairman of the Authority;

⁴[(f) "Member" means a Member of the Authority and includes the Chairman and Vice-chairman;

(g) "Vice-chairman" means the Vice-chairman of the Authority.]

1. Chapter XIX-B, consisting of sections 245N to 245V, inserted by Act 38 of 1993, s. 31 (w.e.f. 1-6-1993).

2. Subs. by Act 10 of 2000, s. 63, for clauses (a) and (b) (w.e.f. 1-6-2000).

3. Ins. by Act 32 of 2003, s. 92 (w.e.f. 1-6-2000).

4. Subs. by s. 92, ibid., for "a non-resident" (1-6-2000).

5. Ins. by Act 25 of 2014, s. 66 (w.e.f. 1-10-2014).

1. Ins. by Act 17 of 2013, s. 53 (w.e.f. 1-4-2015).

2. Ins. by Act 32 of 2003, s. 92 (w.e.f. 14-5-2003).

3. Subs. by Act 7 of 2017, s. 80 (w.e.f. 1-4-2017).

4. Subs. by Act 25 of 2014, s. 66, for clause (f) (w.e.f. 1-10-2014).

5. Ins. by Act 13 of 2018, s. 50 (w.e.f. 1-4-2018).

245-O. Authority for Advance Rulings.-

(1) The Central Government shall constitute an Authority for giving advance rulings, to be known as "Authority for Advance Rulings":

⁵[Provided that the Authority shall cease to act as an Authority for Advance Rulings for the purposes of Chapter V of the Customs Act, 1962 on and from the date of appointment of the Customs Authority for Advance Rulings under section 28EA of that Act.]

⁵[(1A) On and from the date of appointment of the Customs Authority for Advance Rulings referred to in the proviso to sub-section (1), the Authority shall act as an Appellate Authority, for the purpose of Chapter V of the Customs Act, 1962:

Provided that the Authority shall not admit any appeal against any ruling or order passed earlier by it in the capacity of the Authority for Advance Rulings in relation to any matter under Chapter V of the Customs Act, 1962 after the date of such appointment of the Customs Authority for Advance Rulings.]

¹[(2) The Authority shall consist of a Chairman and such number of Vice-chairmen, revenue Members and law Members as the Central Government may, by notification, appoint.

(3) A person shall be qualified for appointment as-

(a) Chairman, who has been a Judge of the Supreme Court ²[or the Chief Justice of a High Court or for at least seven years a Judge of a High Court];

(b) Vice-chairman, who has been Judge of a High Court;

³[(c) a revenue Member-

(i) from the Indian Revenue Service, who is, or is qualified to be, a Member of the Board; or

(ii) from the Indian Customs and Central Excise Service, who is, or is qualified to be, a Member of the Central Board of Excise and Customs, on the date of occurrence of vacancy;]

⁴[(d) a law Member from the Indian Legal Service, who is, or is qualified to be, an Additional Secretary to the Government of India ²[on the date of occurrence of vacancy].]

(4) The terms and conditions of service and the salaries and allowances payable to the Members shall be such as may be prescribed.

(5) The Central Government shall provide to the Authority with such officers and employees, as may be necessary, for the efficient discharge of the functions of the Authority under this Act.

(6) The powers and functions of the Authority may be discharged by its Benches as may be constituted by the Chairman from amongst the Members thereof.

²[(6A) In the event of the occurrence of any vacancy in the office of the Chairman by reason of his death, resignation or otherwise, the senior-most Vice-chairman shall act as the Chairman until the date on which a new Chairman, appointed in accordance with the provisions of this Act to fill such vacancy, enters upon his office.

(6B) In case the Chairman is unable to discharge his functions owing to absence, illness or any other cause, the senior-most Vice-Chairman shall discharge the functions of the Chairman until the date on which the Chairman resumes his duties.]

(7) A Bench shall consist of the Chairman or the Vice-chairman and one revenue Member and one law Member:

⁵[Provided that where the Authority is dealing with an application seeking advance ruling in any matter relating to this Act, the revenue Member of the Bench shall be such Member as referred to in sub-clause (i) of clause (c) of sub-section (3).]

(8) The Authority shall be located in the National Capital Territory of Delhi and its Benches shall be located at such places as the Central Government may, by notification specify.]

5. Ins. by Act 13 of 2018, s. 50 (w.e.f. 1-4-2018).

1. Subs. by Act 25 of 2014, s. 67, for sub-sections (2), (3), (4) and (5) (w.e.f. 1-10-2014).

2. Ins. by Act 7 of 2017, s. 81 (w.e.f. 1-4-2017).

3. Subs. by s. 81, ibid., for clause (c) (w.e.f. 1-4-2017).

4. Subs. by Act 20 of 2015, s. 63, for clause (d) (w.e.f. 1-4-2015).

5. Ins. by Act 13 of 2018, s. 50 (w.e.f. 1-4-2018).

⁶[245-OA. Qualifications, terms and conditions of service of Chairman, Vice-Chairman and Member.-

Notwithstanding anything contained in this Act, the qualifications, appointment, term of office, salaries and allowances, resignation, removal and the other terms and conditions of service of the Chairman, Vice-Chairman and other Members of the Authority appointed after the commencement of Part XIV of Chapter VI of the Finance Act, 2017, shall be governed by the provisions of section 184 of that Act:

Provided that the Chairman, Vice-Chairman and Member appointed before the commencement of Part XIV of Chapter VI of the Finance Act, 2017, shall continue to be governed by the provisions of this Act and the rules made thereunder as if the provisions of section 184 of the Finance Act, 2017 had not come into force.]

6. Ins. by Act 7 of 2017, s. 174 (w.e.f. 1-4-2017).

245P. Vacancies, etc., not to invalidate proceedings.-

No proceeding before, or pronouncement of advance ruling by, the Authority shall be questioned or shall be invalid on the ground merely of the existence of any vacancy or defect in the constitution of the Authority.

245Q. Applicationfor advance ruling.-

(1) An applicant desirous of obtaining an advance ruling under this Chapter ¹[2*** or under Chapter IIIA of the Central Excise Act, 1944 (1 of 1944) or under Chapter VA of the Finance Act, 1994 (32 of 1994)] may make an application in such form and in such manner as may be prescribed, stating the question on which the advance ruling is sought.

(2) The application shall be made in quadruplicate and be accompanied by a fee of ³[ten thousand rupees or such fee as may be prescribed in this behalf, whichever is higher].

(3) An applicant may withdraw an application within thirty days from the date of the application.

1. Ins. by Act 7 of 2017, s. 82 (w.e.f. 1-4-2017).

2. The words and figures "or under Chapter V of the Customs Act, 1962 (52 of 1962)" shall stand omitted (date to be notified) by Act 13 of 2018, s. 51.

245R. Procedure on receipt of application.-

(1) On receipt of an application, the Authority shall cause a copy thereof to be forwarded to the ⁴[Principal Commissioner or Commissioner] and, if necessary, call upon him to furnish the relevant records:

Provided that where any records have been called for by the Authority in any case, such records shall, as soon as possible, be returned to the ³[Principal Commissioner or Commissioner].

(2) The Authority may, after examining the application and the records called for, by order, either allow or reject the application:

⁵[Provided that the Authority shall not allow the application where the question raised in the application,-

(i) is already pending before any income-tax authority or Appellate Tribunal [except in the case of a resident applicant falling in sub-clause (iii) of clause (b) of section 245N] or any court;

(ii) involves determination of fair market value of any property;

(iii) relates to a transaction or issue which is designed prima facie for the avoidance of incometax [except in the case of a resident applicant falling in sub-clause (iii) of clause (b) ofsection 245N 6*** ⁷[or in the case of an applicant falling in sub-clause (iiia) of clause (b) of section 245N]]:]

Provided further that no application shall be rejected under this sub-section unless an opportunity has been given to the applicant of being heard:

Provided also that where the application is rejected, reasons for such rejection shall be given in the order.

(3) A copy of every order made under sub-section (2) shall be sent to the applicant and to the ³[Principal Commissioner or Commissioner].

(4) Where an application is allowed under sub-section (2), the Authority shall, after examining such further material as may be placed before it by the applicant or obtained by the Authority, pronounce its advance ruling on the question specified in the application.

(5) On a request received from the applicant, the Authority shall, before pronouncing its advance ruling, provide an opportunity to the applicant of being heard, either in person or through a duly authorised representative.

Explanation.-For the purposes of this sub-section, "authorised representative" shall have the meaning assigned to it in sub-section (2) of section 288, as if the applicant were an assessee.

(6) The Authority shall pronounce its advance ruling in writing within six months of the receipt of application.

(7) A copy of the advance ruling pronounced by the Authority, duly signed by the Members and certified in the prescribed manner shall be sent to the applicant and to the ¹[Principal Commissioner or Commissioner], as soon as may be, after such pronouncement.

1. Ins. by Act 7 of 2017, s. 82 (w.e.f. 1-4-2017).

3. Subs. by Act 23 of 2012, s. 92, for "two thousand five hundred rupees" (w.e.f. 1-7-2012).

4. Subs. by Act 25 of 2014, s. 4, for "Commissioner" (w.e.f. 1-6-2013).

5. Subs. by Act 10 of 2000, s. 64, for the proviso (w.e.f. 1-6-2000).

6. The words "or in the case of an applicant falling in sub-clause (iiia) of clause (b) of section 245N" omitted by Act 17 of 2013, s. 54 (w.e.f. 1-4-2013).

7. Ins. by s. 54, ibid. (w.e.f. 1-4-2015).

²[245RR.Appellate authority not to proceed in certain cases.-

No income-tax authority or the Appellate Tribunal shall proceed to decide any issue in respect to which an application has been made by an applicant, being a resident, ³[under sub-section(1) of section 245Q]].

2. Ins. by Act 21 of 1998, s. 48 (w.e.f. 1-10-1998).

3. Subs. by Act 23 of 2004, s. 52, for "under sub-section (1) of section 245R" (w.e.f. 1-10-1998).

245S. Applicability of advance ruling.-

(1) The advance ruling pronounced by the Authority under section 245R shall be binding only-

(a) on the applicant who had sought it;

(b) in respect of the transaction in relation to which the ruling had been sought; and

(c) on the ¹[Principal Commissioner or Commissioner], and the income-tax authorities subordinate to him, in respect of the applicant and the said transaction.

(2) The advance ruling referred to in sub-section (1) shall be binding as aforesaid unless there is a change in law or facts on the basis of which the advance ruling has been pronounced.

1. Subs. by Act 25 of 2014, s. 4, for "Commissioner" (w.e.f. 1-6-2013).

2. Ins. by Act 21 of 1998, s. 48 (w.e.f. 1-10-1998).

245T. Advance ruling to be void in certain circumstances.-

(1) Where the Authority finds, on a representation made to it by the ¹[Principal Commissioner or Commissioner] or otherwise, that an advance ruling pronounced by it under sub-section (6) of section 245R has been obtained by the applicant by fraud or misrepresentation of facts, it may, by order, declare such ruling to be void ab initio and thereupon all the provisions of this Act shall apply (after excluding the period beginning with the date of such advance ruling and ending with the date of order under this sub-section) to the applicant as if such advance ruling had never been made.

(2) A copy of the order made under sub-section (1) shall be sent to the applicant and the ¹[Principal Commissioner or Commissioner].

1. Subs. by Act 25 of 2014, s. 4, for "Commissioner" (w.e.f. 1-6-2013).

245U. Powers of the Authority.-

(1) The Authority shall, for the purpose of exercising its powers, have all the powers of a civil court under the Code of Civil Procedure, 1908 (5 of 1908) as are referred to in section 131 of this Act.

(2) The Authority shall be deemed to be a civil court for the purposes of section 195, but not for the purposes of Chapter XXVI, of the Code of Criminal Procedure, 1973 (2 of 1974) and every proceeding before the Authority shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228, and for the purpose of section 196, of the Indian Penal Code (45 of 1860).

245V. Procedure of Authority.-

The Authority shall, subject to the provisions of this Chapter, have power to regulate its own procedure in all matters arising out of the exercise of its powers under this Act.]

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