{"id":5380,"date":"2012-08-15T06:41:31","date_gmt":"2012-08-15T06:41:31","guid":{"rendered":"http:\/\/itatonline.org\/archives\/?p=5380"},"modified":"2012-08-15T06:41:31","modified_gmt":"2012-08-15T06:41:31","slug":"in-re-castleton-investment-ltd-aar-aar-not-bound-by-own-rulings-transfer-pricing-roi-filing-provisions-apply-despite-no-income-foreign-company-is-liable-for-mat-us-115jb","status":"publish","type":"post","link":"https:\/\/itatonline.org\/archives\/in-re-castleton-investment-ltd-aar-aar-not-bound-by-own-rulings-transfer-pricing-roi-filing-provisions-apply-despite-no-income-foreign-company-is-liable-for-mat-us-115jb\/","title":{"rendered":"In Re Castleton Investment Ltd (AAR)"},"content":{"rendered":"\n\n
Click here to download the judgement (castleton_AAR_binding_transfer_pricing_115JB.pdf) <\/strong> <\/a><\/p><\/td>\n<\/tr>\n<\/table>\n


\nAAR not bound by own rulings. Transfer pricing & ROI filing provisions apply despite no income. Foreign company is liable for MAT u\/s 115JB
\n<\/strong><\/p>\n

The applicant, a Mauritius company, sold shares of Burroughs Wellcome (India) Ltd. The resultant capital gains were not chargeable to tax under the India-Mauritius DTAA. The AAR had to consider whether, as the Applicant had no income chargeable<\/em> to tax in India, (a) the transfer pricing provisions<\/em> were applicable to its, (b) section 115JB (MAT) was applicable to it and (c) it was liable to file a return of income. The AAR had to also consider whether it was bound by its own earlier rulings. HELD by the AAR:<\/p>\n

(i) The theory of precedents<\/strong> does not have strict application to the AAR. It is bound<\/strong> only by the decisions of the Supreme Court. The decisions of High Courts have only persuasive value<\/strong>. The AAR is not subordinate<\/strong> to any High Court for even Article 227 of the Constitution to apply and there are grave doubts<\/strong> whether the jurisdiction under Article 226 will be attracted to the AAR. While the AAR should be slow<\/strong> in disagreeing<\/strong> with propositions of law laid down in earlier rulings, it should not be deterred from taking a contrary view<\/strong> if it is convinced that the earlier view is not correct;<\/p>\n

(ii) Though in Praxair Pacific<\/strong> 326 ITR 276, Vanenburg Group<\/strong> 289 ITR 464 & Dana Corporation<\/a><\/strong> 32 DTR 1, it was held that the transfer pricing provisions were machinery provisions and could not apply if the income was not chargeable to tax, this view is not correct<\/strong> because first the computation of the “income” arises before considering its’ chargeability. The fact that the income is not taxable and the transfer pricing exercise may not be fruitful<\/strong> cannot affect the applicability of the statutory provisions;<\/p>\n

(iii) A return of income has to be filed u\/s 139(1) even if the income is not chargeable to tax;<\/p>\n

(iv) Though in Timken<\/a><\/strong> 326 ITR 193 (AAR), it was held that s. 115JB does not apply to foreign companies, this view is not correct<\/strong> because s. 115JB applies to every “company” and makes no distinction between a resident company and a non-resident company. S. 2(17) defines a “company” to include a “foreign company”. The fact that the foreign company has no permanent establishment<\/strong> in India makes no difference to the applicability of s. 115JB. There may be practical difficulties<\/strong> for foreign companies to prepare accounts in terms of Schedule VI to the Companies Act but that is no reason to whittle down the scope of s. 115JB. Advance Ruling P No. 14<\/a><\/strong> (234 ITR 335) & Niko Resources<\/strong> 234 ITR 828 followed)<\/p>\n

\nOn the Q whether the AAR is subject to the High Court’s jurisdiction see Columbia Sportswear<\/a><\/strong> (SC)\n<\/div>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

The theory of precedents<\/strong> does not have strict application to the AAR. It is bound<\/strong> only by the decisions of the Supreme Court. The decisions of High Courts have only persuasive value<\/strong>. The AAR is not subordinate<\/strong> to any High Court for even Article 227 of the Constitution to apply and there are grave doubts<\/strong> whether the jurisdiction under Article 226 will be attracted to the AAR. While the AAR should be slow<\/strong> in disagreeing<\/strong> with propositions of law laid down in earlier rulings, it should not be deterred from taking a contrary view<\/strong> if it is convinced that the earlier view is not correct<\/p>\n

Read more ›<\/a><\/div>\n

<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[3,4],"tags":[],"class_list":["post-5380","post","type-post","status-publish","format-standard","hentry","category-aar","category-all-judgements"],"acf":[],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/posts\/5380","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/comments?post=5380"}],"version-history":[{"count":0,"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/posts\/5380\/revisions"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/media?parent=5380"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/categories?post=5380"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/tags?post=5380"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}