By TIOL News Service

NEW DELHI, FEB 25, 2015: GIVEN the fact that the Finance Minister had in his first Budget expanded the jurisdiction of the Authority for Advance Ruling to domestic income taxpayers, the announcement relating to setting up of more Benches was long awaited. Finally, the Union Cabinet today sanctioned two more Benches - one each in Delhi and Mumbai.

The Cabinet also okayed the creation of two posts of Vice-Chairmen in the Apex scale and four posts of Members (two posts of Revenue Members and two posts of Law Members) in the Higher Administrative Grade (HAG+) and two posts of Secretary at the level of Commissioner of Income Tax/Joint Secretary; and one time expenditure of Rs 7.48 crores for establishment of the two additional benches and additional annual recurring expenditure of Rs. 6.61 crores for running these two additional benches.

The creation of two additional benches of the Authority would dispose of increased number of cases and pendency of cases would be reduced benefitting the tax payer and the Government. Besides, this will operationalise the facility of advance ruling for resident tax payers. The proposed additional Benches of Authority for Advance Rulings (Income Tax) will facilitate the cause of the resident tax payers in obtaining tax clarity in certain situations.

In order to provide the facility of ascertaining the Income-tax liability of a non-resident to plan their Income-tax affairs well in advance and to avoid long drawn and expensive litigation, a scheme of Advance Rulings was introduced under the Income-Tax Act, 1961 and the Authority for Advance Rulings was constituted. A non-resident or certain categories of resident can obtain binding rulings from the Authority on question of law or fact arising out of any transaction/proposed transactions which are relevant for the determination of his tax liability.

In order to enable resident taxpayers to obtain an advance ruling in respect of their income tax liability above a defined threshold, it has been decided to strengthen the Authority for Advance Rulings by constituting additional benches.