Delhi HC rules on maintainability of AAR application after receipt of assessment notice

This Tax Alert summarizes a recent ruling of the Delhi High Court (HC) in the case of Hyosung Corporation (Applicant), on the issue of maintainability of applications filed before the Authority for Advance Rulings (AAR) post filing of return of income (ROI) and post receipt of notice from the Tax Authority.

One of the mandatory conditions for admitting the application by the AAR is that the AAR shall not admit an application where the question raised in the application is “already pending” before any Tax Authority.

The HC held that where the Tax Authority had, before the date of filing of the AAR application, already sent a detailed questionnaire to the taxpayer, including on the question raised in the application, it amounts to the question being already pending before the Tax Authority, creating a bar in admitting of the AAR application. However, the mere fact that a standard pre-printed notice to assess the ROI is issued by the Tax Authority before the date of filing of the AAR application would not result in pendency of the question raised in the application before the Tax Authority.