Section 384: procedure on receipt of application

Introduction

The Board for Advance Rulings first obtains the relevant departmental records, then decides whether to allow the application to proceed or reject it.

If allowed, a written ruling is to be pronounced within six months from receipt of the application. Rejection requires a hearing opportunity and reasons; the applicant may also request a hearing before the ruling.

Key takeaways

Step 1: records called for

On receipt of an application, the Board for Advance Rulings forwards a copy to the Principal Commissioner or Commissioner and calls upon that officer to furnish the relevant records, which must be returned at the earliest opportunity.

Step 2: application allowed or rejected

After examining the application and the records called for, the Board for Advance Rulings may allow or reject the application by an order.

The application must be rejected if the question raised:

• Is already pending before any income-tax authority or Appellate Tribunal - except in the case of a resident applicant falling under Section 380(b)(iii) - or any court;
• Involves determination of the fair market value of any property;
• Relates to a transaction or issue designed prima facie for the avoidance of income-tax - except for a resident applicant under Section 380(b)(iii) or an applicant under Section 380(b)(iv).

Hearing and reasons required before rejection

An application cannot be rejected under sub-section (2) unless the applicant has been given an opportunity of being heard, and the order records the reasons for rejection.

A copy of every order made under sub-section (2) - whether allowing or rejecting the application - is sent to the applicant and to the Principal Commissioner or Commissioner.

Pronouncing the ruling

Where an application is allowed, the Board for Advance Rulings examines any further material placed before it by the applicant or obtained by it, and pronounces its advance ruling in writing on the question specified in the application, within six months of the receipt of the application.

On a request from the applicant, the Board must provide an opportunity of being heard - in person or through a duly authorised representative - before pronouncing the ruling.

A copy of the advance ruling, duly signed by the Members and certified in the prescribed manner, is sent to the applicant and to the Principal Commissioner or Commissioner as soon as may be after pronouncement.

"Authorised representative" here carries the meaning assigned to it in Section 515(3)(a), as if the applicant were an assessee.

Step-by-step flow for an advance ruling application under Section 384

1. 1

   Send a copy to the Principal Commissioner or Commissioner and call for records

   Section 384(1). The records are to be returned at the earliest opportunity.

2. 2

   Does the question fall within a rejection ground in Section 384(3)?

   The grounds are that the question: (a) is already pending before any income-tax authority or the Appellate Tribunal (except for a resident applicant under section 380(b)(iii)), or before any court; (b) involves determining the fair market value of any property; or (c) relates to a transaction or issue designed prima facie to avoid income-tax (except for a resident applicant under section 380(b)(iii) or an applicant under section 380(b)(iv)).

   • Yes: The application is rejected, but only after hearing the applicant and with reasons in the order (Section 384(4)). A copy of the order is sent to the applicant and the Principal Commissioner or Commissioner.
   • No: The application may be allowed by order under Section 384(2). Go to the next step.
3. 3

   Send a copy of the order to the applicant and the Principal Commissioner or Commissioner

   Section 384(5) applies to every order allowing or rejecting the application.

4. 4

   Examine further material and hear the applicant if asked

   The Board for Advance Rulings may examine further material placed by the applicant or obtained by it. On request, it must hear the applicant in person or through a duly authorised representative before pronouncing the ruling (Section 384(7)).

5. 5

   Pronounce the ruling within six months of receipt of the application

   The ruling is in writing on the question in the application (Section 384(6)). A copy signed by the Members and certified as prescribed is sent to the applicant and the Principal Commissioner or Commissioner (Section 384(8)).

Practical checklist

Glossary

Advance ruling

The written determination pronounced by the Board on the question specified in an admitted application.

Applicant

A person within section 380 who makes a section 383(1) application.

Frequently asked questions