S. 245S stipulates that an advance ruling is binding on the applicant, the CIT and the authorities subordinate to him in relation to which it was sought. S. 245S(2) postulates that the ruling shall cease to be binding if there is a change in law or facts on the basis of which the advance ruling has been pronounced. Once a ruling has been pronounced by the Authority, its’ binding effect can only be displaced in accordance with the procedure stipulated in law. The CIT manifestly exceeded his jurisdiction in relying upon the ruling of the AAR in Fidelity Northstar Fund as a basis to hold that the ruling obtained by the assessee was not binding on the department. The CIT ignored the clear mandate of the statutory provision that a ruling was binding only on the Applicant and the Revenue in relation to the transaction for which it is sought. The ruling in Fidelity cannot possibly, as a matter of the plain intendment and meaning of s. 245S, displace the binding character of the advance ruling rendered between the assessee and the Revenue

S. 194J requires tax to be deducted at source when payment of any sum is made to a “resident” by way of “fees for professional services”. The term “professional services” is defined in Explanation (a) to mean services rendered by a person inter alia in the course of carrying on medical profession. The term “resident” is not confined to a natural person. The argument that the medical profession can only be carried on by an individual and that consequently a hospital cannot be regarded as carrying on the medical profession and hence payments made by TPAs to a hospital cannot be treated as fees for professional services is not correct because in defining the expression “professional services” Parliament has not confined it to mean services rendered by an individual who carries on the medical profession. If Parliament intended to restrict the ambit of s. 194J only to fees received by an individual, it was open to Parliament to use words that would be indicative of that position. In fact, in defining the character of the person who is to make the payment, Parliament has excluded from the ambit of the expression “any person” an individual and a HUF. However, in defining the character of the payee, Parliament has used the wider expression “resident”. Further, the words “services rendered by a person in the course of carrying on” in the definition include services which are incidental to the carrying out of the medical profession

It is far fetched to accept the view that the rejection of a s. 197 application lies in the absolute discretion of the AO or that the AO is not bound to indicate reasons for the rejection of the application. The AO cannot be heard to urge that though an assessee fulfills all the requirements which are stipulated in Rule 28AA/29B, he possesses an unguided discretion to reject the application. In rejecting an application, he is bound to furnish reasons which demonstrate application of mind to the germane. Hence, It is impossible to accept the view that the rejection of an application u/s 197 does not result in an order. The expression “order” for purposes of s. 264 has a wide connotation and includes a determination by the AO on an application u/s 197

An exporter is not obliged to maintain the export proceeds in the EEFC Account but, this is a facility made available by the RBI. The transaction of export is complete in all respects upon repatriation of the proceeds. It lies within the discretion of the exporter as to whether the export proceeds should be received in a rupee equivalent in the entirety or whether a portion should be maintained in convertible foreign exchange in the EEFC Account. The exchange fluctuation arises after the export transaction is complete and payment has been received by the exporter. It does not bear a proximate and direct nexus with the export transaction so as to be “derived” from exports for s. 80HHC. Interest on EEFC deposits is not “business income” but is “income from other sources” and not eligible for deduction u/s 80HHC

In the case of bonus shares, the question of indexation does not arise because the cost of acquisition is taken to be nil. What the proviso to s. 112 essentially requires is that where the tax payable in respect of a listed security (being LTCG) exceeds 10% of the capital gains before indexation, such excess beyond 10% is liable to be ignored. The proviso to s. 112 requires a comparison to be made between the tax payable at 20% after indexation with the tax payable at 10% before indexation. If the shares were acquired at a cost, it becomes necessary for purposes of the proviso to s. 112(1) to compute capital gains before giving effect to indexation. However, that does not arise in respect of bonus shares. There is nothing in the s. 112 to suggest that the assessee would be entitled to a set off of the loss u/s 70 but without the benefit of indexation

In CIT vs. Alagendran Finance 293 ITR. 1 (SC) it was held that the doctrine of merger does not apply where the subject matter of reassessment and original assessment is not one and the same. Where the assessment is reopened on a specific ground and the reassessment is confined to that ground, the original assessment continues to hold the field except for those grounds on which a reassessment has been made. Consequently, an appeal on the grounds on which the original assessment was passed and which does not form the subject of reassessment continues to subsist and does not abate. The order of assessment is not subsumed in the order of reassessment in respect of those items which do not form part of the order of reassessment