Advance Ruling Authority:-
Advance Ruling is an mechanism where Advance Ruling Authority will give Judgement regarding any Transaction already undertaken or to be undertaken before actual judgement as per Provisions of Income Tax. Application can be made for either Question of Law or Question of Fact.
Persons eligible to Make Application to Advance Ruling Authority
Any Non - Resident or
Any Resident having Transaction with Non Resident only in respect to arising Tax Liability of Non Resident.
Any Resident whose liability arises from one more transaction Exceeding Rs. 100 Crore.
Public Sector Company
Any Other Notified Resident
Above persons can make Application to Advance Ruling Authority in Prescribed form and manner along with Application fees in Quadruplicate. Once Application made can be withdrawn within 30 days of Date of Application.
Fees Payable along with Application: -
If Applicant is Public Sector Company then Fees is Rs. 10000 per Application.
If Applicant is any Other Eligible Applicant other than Public Sector Company the fees is Rs. 2 Lakh (if amount of Transaction is up to Rs. 100 Crore) or Rs. 5 Lakh ( if Transaction Amount is greater than Rs. 100 Crore but less Than Rs. 300 Crore) or Rs. 10 (if Transaction Amount is greater than Rs 300 crore).
Any Judgement provided by Advance Ruling Authority is Applicable to Applicant for Transaction which Advance Ruling is Taken and Applicable to Income Tax Authorities up to Level of Commissioner of Income Tax (CIT). Advance Ruling is binding, if there is change in law or Facts of Transaction or Advance Ruling is obtained by Applicant with help of fraud or Misrepresentation of Facts and such ruling is declared void ab initio by Advance Ruling Authority.
Procedure for Making Application to Advance Ruling Authority: -
Step I: - Application in Quadruplicate by Eligible Applicant along with Prescribed Application fees.
Step II: - On Receipt of Application Advance Ruling Authority forward to Commissioner of Income Tax to check Where Case is pending or Not and direct Commissioner of Income Tax to Record the same. Advance Ruling Authority may Reject or Application as may it deemed fit. Advance Ruling Authority shall reject Application in following cases: -
Any Question pending before High Court or Supreme court on Application made by Public Sector Companies.
Any Case Pending with Income Tax Authority or Income Tax Appilate Tribunal or Supreme court on Application made by Eligible Applicant other than Public Sector Companies.
When Application is made for Question of Law Regarding Fair Market Value.
When Application is made to avoid Tax except where Application made by Public Sector Companies.
Step III: - Advance Ruling Authority shall pronounce it's judgement within 6 months from the Date of Application. A Copy of Ruling forwarded/sent to Assessee and Commissioner of Income Tax.
Settlement Commission: -
Settlement Commission is a Mechanism Provided to Assessee to Disclose undisclosed Income to Income Tax Authority before Completion of Assessment under sec 143(3), Sec 144, sec 147, Sec 153 A of Income Tax Act.
Conditions for Making Application to Settlement Commission by Asseessee: -
1. Tax on Additional Income Disclosed should be more than Rs. 50 Lakh in Raid Cases and Rs. 10 Lakh.
2. Asseessee's Assessment should be Pending Under sec 143(3), Sec 144, Sec 147, Sec 153A.
Note: - Time Period for which Asseessee's Case is treated as Pending case: -
In Case of Sec 143(3), From the Date on which Notice under Sec 143(2) of Income Tax Act is issued.
In case of Sec 144, from the Date on Which Notice under sec 144 of Income Tax Act is issued.
In case of Sec 147, from the Date on which Notice under Sec 148 of Income Tax Act is issued.
In case of Sec 153A, from the Date on which Notice under Sec 153Aof Income Tax is issued.
3. Assessee have to Pay Additional Income Tax along with Interest before Making Application to Settlement Commission.
4. Any Application made by Asseessee can not be Withdrawn.
5. Asseessee have to Intimate Assessing Officer after Making Application to Settlement Commission.
6. Additional Tax Means Tax on Income Disclosed in Application in case Where Income Tax Return is not filed and Tax on Income Disclosed plus Income Declared in Income Return less Tax Paid on Income Delcared in Income Tax Return in case where Income Tax Return is filed.
Procedure to Make Application to Settlement Commission: -
Step I: - Application by Asseessee to Settlement Commission.
Step II: - Within 7 days from the Date of Application Settlement Commission Enquire the Assessee through Show Cause Notice, why his or her Application is accepted.
Step III: - On Receipt of Application Settlement Commission within 14 Days from the Date of Application may Allow or Reject Application where Settlement Commission fails to pass any order either of Acceptance of Application or Rejection of Application in such case Application deemed to be treated as Application accepted.
Step IV: - On Acceptance of Application Settlement Commission shall call for a Report from Commissioner of Income Tax within 30 days from the Date of Receipt of Application. Commissioner of Income Tax shall submit submit such Report within 30 days of Receipt of Call of Report from Settlement Commission.
Step V: - On Receipt of Report from Commissioner of Income Tax after enquiring Report within 15 days from the Date of Receipt of Report may Declare Application either Valid or Invalid.
Step VI: - On Declaration of Application Valid, Settlement Commission shall call Commissioner of Income Tax Records Pertaining to Asseessee. On Receipt of such instructions Commissioner of Income Tax shall Provide Records Pertaining to Asseessee within 90 days from the Date of Such Instructions to produce Reports.
Step VII: - On Receipt of Records and Report from Commissioner of Income Tax Settlement Commission shall Examine such Records and Reports. After Examination of Reports and Records Settlement Commission shall Pass an Order After Giving Opportunity Of Being Heard Within 18 Months form the Month in which Assessee had made Application.
Step VII: - On Receipt of such Order Assessee shall pay Tax and Interest on such tax within 36 Days From Date of Receipt of Order.