Syed Shah Mohammed Quadri, J. (Chairman) - (1.)1. In this application under Section 245Q(1) of the Income-tax Act, 1961 (for short 'the Act'), the applicant is a tax resident of India . It seeks advance ruling of the Authority on the following question:
Whether Tax is to be deducted by SREHT, India on the payments made on account of annual contract fee and additional fee to HMI , USA , when both the parties are exempt from tax in their respective countries.

(2.)The applicant is a health and educational trust established in 1985. It runs institution to conduct medical courses. It enjoys the status of Deemed University under the provisions of the University Grants Commission Act, 1956. With a view to provide quality education in medical courses it entered into an agreement with Harvard Medical International for transfer of knowledge on a contract basis. The income of the Trust is granted exemption as it is registered under Section 12AA of the Act. It is stated that Harvard Medical International is also recognised as a tax-exempt entity under Section 501(c) (3) of the Internal Revenue Code, USA from 1994.
3 . The Commissioner in his remarks points out that on 20.4.2005 the applicant filed a petition before the DCIT, Central Circle I (3), Chennai for issuance of NOC to remit the fees payable to Harvard Medical International, USA without deduction of tax and that issue is pending with the AO. It is submitted that the application is liable to be rejected in view of the clause(i) of first proviso to Sub-section(2) of Section 245R of the Act.

4. In view of the comments of the Commissioner, the Authority issued notice to the applicant to show cause as to why the application should not be rejected in view of the first proviso to Sub-section(2) of Section 245R of the Act.

5. In spite of the service of the notice, none appears for the parties.

6. It will be apposite to refer to Sub-section (2) of Section 245R of the Act, in so far it is relevant for our purpose which reads as follows:

Section 245R - Procedure on receipt of application

x x x x x x

The Authority may, after examining the application and the records called for, by order, either allow or reject the application:

[provided that the Authority shall not allow the application where the question raised in the application, -

(i) is already pending before any income-tax authority or Appellate Tribunal [except in the case of a resident applicant falling in Sub-clause (iii) of Clause (b) of Section 245N] or any court.

(ii) & (iii) x x x x x x x ]

From a plain reading of Clause (i) of the first proviso, quoted above, it is clear that the application cannot be allowed under Sub-section(2) of Section 245R of the Act for the purpose of pronouncement of ruling under Sub-section (4) thereof if the question raised in the application is already pending before any income-tax authority or Appellate Tribunal [except in the case of a resident applicant falling in Sub-clause (iii) of clause(b) of Section 245N] or any Court.

7. The question posed before the Authority relates to deduction of tax at source. From the comments of the Commissioner, it is evident that the same question is pending before the AO. In view of this position, we have no option but to reject this application. The application is accordingly rejected.