NETAPP B V Vs. AUTHORITY FOR ADVANCE RULINGS

JUDGEMENT

(1.) These writ petitions involve decision on identical questions of law, and were, with consent of counsel for parties, taken up for final hearing. All the petitioners question the orders of the Authority on Advance Ruling (AAR) declining to entertain their applications seeking advance rulings.

(2.) The facts necessary for determination of these petitions are brief. The First Petitioner had filed its return of income under Section 139(1) of the Act on 31.03.2010. The transactions which form the basis of the application before the AAR were entered into on 26.04.2008 and 26.11.2008. The application for advance ruling was filed on 17.06.2010. The Second Petitioner had entered into a sub-contract with Cellseis Geophysical Inc. From this contract it derived an income. Based on this sub-contract, the applicant entered into an agreement with Spectrum USA for hiring a vessel. It withheld taxes under Section 195 ITA on the payments made by it. It filed its return of income for the Assessment Year 2009- 2010. After having filed the return, it had filed the application before the AAR on 17.05.2010, raising identical questions. The Third Petition is also filed by Sin Oceanic, and arises out of the same transaction as mentioned in the second writ and is against the same order of the AAR.

(3.) All the Petitioners had contended before the AAR, that the objective of the mechanism of advance rulings, with respect to applicants entitled to apply, is to cut short the delay in dispute resolution, and therefore the bar enacted under Section 245R(2) must be strictly construed. They also urged that since the purpose of this mechanism was also to attract foreign investment, the AAR should be wary of interpreting the proviso too widely and consequently, of restricting its own jurisdiction. They also contended that restrictions on jurisdiction conferred have to be considered strictly, and jurisdiction ought not to be declined unless the application comes strictly within the clauses of the restricting proviso.