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GENERAL FRAMEWORK
The Authority for Advance Rulings (AAR) is a body set up under the Actspecifically to give rulings to non-residents on the tax implications of theiroperations in India. The prime objective for setting up the AAR was to avoid needless litigationand for promoting better relations with the tax-payers. During the year 1993, a scheme for giving advance rulings in respect of the transactions involving non-residents was worked out and the samewas put into operation.
CONSTITUTION OF AAR
The AAR consists of the following memberswho are appointed by the Indian Government: A Chairman who is a retired judge of the Supreme Court; An officer of the Indian Revenue Service (IRS) who is qualifiedto be a member of the Central Board of Direct Taxes; An officer of the Indian Legal Service who is, or is qualified tobe, an Additional Secretary to the Government of India.
The applicant should submit the application, in person or through an AuthorisedRepresentative (AR) to the Secretary of the AAR or to any Officer that the Secretarymay notify in writing or must be sent by registered post to the Secretary of the AAR.The application should be submitted in quadruplicate. A fee of Rs. 2,500 (RupeesTwo Thousand Five Hundred only) should accompany each application. An applicant has an option to withdraw the application within a period of thirty daysfrom the date of filing the application. On receipt of the application, AAR forwards a copy of the same to the Commissionerof Income-tax (CIT) and calls upon the CIT, if necessary, to furnish the relevantrecords. The AAR may, after examining the application and records called for, eitherallow or reject the application. The AAR, however, cannot reject the applicationunless an opportunity has been granted to the applicant of being heard, either inperson or through an authorized representative
Helps non-residents in planning their income taxaffairs well in advance; Brings certainty in determination of the tax liability; Helps in avoiding long drawn litigation; and It is relatively inexpensive, expeditious and binding.
139(3)-Return of Loss
This return has to be filed in time specified u/s 139(1) to carry forward losses from the following heads -Profit & Gain from Business or Profession, Speculation loss, Capital Gains & horse race loss. Not necessary for Unabsorbed Depreciation and Loss from House Property. Ref. Circular 8/2001 it has power to condone (be lenient with) delay.
139(4)-Belated Return
Can be filed before one year from end of relevant assessment year. (Eg. For march 08 31/3/10) to be filed if return not submitted with due date of 139(1) or 142(1) Impact of late filing of Income tax return
Interest u/s 234A Loss of Interest on refund Audit Report Revised return Not able to carry forward the losses some of the deduction u/s 80 are not available
Speculation loss Business loss excluding loss due to unabsorbed depreciation and house property Short term capital loss Long term capital loss
142(1) (I) Notice for filing return (II) Power to call for information
Can be issued only after time limit u/s 139(1) expires AO shall not require the production of any Books and documents relating to period not more than 3 years prior to P.Y. For AO to ask for Assets & Liability statement prior approval of Joint Commissioner required.
142(2)-Inquiry by AO
For the purpose of obtaining full information in respect of the income or loss of any person & getting other information, AO makes necessary inquiry.
Best Judgement u/s144 Penalty u/s271(b) Prosecution u/s 276D Order u/s132 for search & seizure
143(3)-Scrutiny/Regular Assessment
A.O. Shall make assessment of income from material gathered and evidence produced. Than determine tax payable or refund. Time Limit : Within 21 months from the end of relevant A.Y. (For A.Y.200809 till 31/12/2010)
149-Time Limit for issue of notice u/s148 and who is authorised to issue such notice
Most important. Refer detailed note given with this summary sheet
Discussion on S: 149. Time limit for issue of notice for income escaping assessment.
* Note : - Very Important for point No. 3 & 4 above : Except for the conditions mentioned above for reassessment, the following additional conditions should also be satisfied for taking up proceedings after the expiry of four years from the end of relevant assessment year. (This is a part of Section 150)
(1) Assessment has not been completed under section 143(3)/147 (2) Assesses has not filed return under section 139 or in response to notice under section 142(1) & 148 & (3) (This is most important) Assesses has not disclosed fully & truly - all material facts , which were necessary for assessment. Additional Point : - Relating to Non Resident (This is a part of Section 150) (1) No notice can be issued to the agent of a non resident after the expiry of 2 years from the end of relevant assessment year (2) In case of a non resident, however, notice an directly be issued to non resident within the aforesaid time frame (above table)
Within 9 months from the end of financial year in which notice is served
Note : If a valid application is made for rectification within statutory time limit, but it is not disposed by IT authority, than also they can rectify order after the above said time limit.
156-Notice of Demand
Served by A.O. when any tax, interest, penalty or any other sum is payable by assessee. Its in specified form. This is important for further litigation
157-Initimation of Loss
If during assessment, it is established that assessee is entitled to carry forward loss, than same shall be intimated by AO in writing
Consequences : - Order admitting or rejecting assessee's form is passed. This order is not appealable. If assessee's contention is accepted, than : his case is disposed off without awaiting final decision. The assessee shall not be entitled to appeal on the same question of law & when final decision is given by court, the above order shall be amended if necessary