IN RE: MUSTAQ AHMED Vs. STATE
LAWS(AR)-2007-8-2
AUTHORITY FOR ADVANCE RULINGS
Decided on August 17,2007

In Re: Mustaq Ahmed Appellant
VERSUS
Respondents

JUDGEMENT

P.V. Reddi, J. (Chairman) - (1.) THE applicant is an individual who is a resident of Singapore and a non -resident in India. He is the sole proprietor of the business under the name and style of 'Mustafa Gold Mart' at Chennai engaged in the purchase, manufacture and sale of gold jewellery. The applicant is also the managing director of Mustafas Pte. Limited, having its registered office in Singapore. Apart from the business as above, the applicant is also engaged in the activity of purchasing gold jewellery in India for the purpose of export. He also purchases gold for the purpose of export of the converted gold jewellery. It is claimed that this activity is totally unrelated to the sole proprietary business in jewellery carried on by the applicant in Chennai.
(2.) THE applicant has been submitting returns of his business income derived from local sales and export sales with Addl. Director of IT (International Taxation), Chennai. The returns for the asst. yrs. 2005 -06 and 2006 -07 were filed on 30th Oct., 2005 and 31st Oct., 2006 respectively. In the returns, the income included the income derived from purchase and export of gold ornaments. However, the applicant filed revised returns for these two years on 30th March, 2007 claiming exemption of the income relating to purchase of gold ornaments for export. Under Explns. (a) and (b) to Section 9(1)(i), in the case of non -resident, no income shall be deemed to accrue or arise in India through or from operations which are confined to purchase of gold in India for the purpose of export. In view of this statutory provision, it is submitted that the income arising from the operations confined to purchase of gold ornaments and gold converted into gold ornaments for the purpose of export does not accrue or arise in India and therefore not liable to be included in his total income assessable to tax. The following five questions were framed by the applicant for the purpose of seeking advance ruling: (i) Whether on the facts and in the circumstances of the case the income derived by the applicant on the purchase in India and export of gold jewellery accrues or arises in India and is taxable in India ? (ii) Whether on the facts and in the circumstances of the case the income arising to the applicant on the purchase in India of gold for the purpose of manufacturing gold jewellery in India for export and export of the same accrues or arises in India and is taxable in India ? (iii) Whether on the facts and in the circumstances of the case the income arising to the applicant on the purchase and export of gold ornaments constitutes income arising through or from the operations confined to purchase of goods in India for the purpose of export and hence does not accrue or arise in India and is consequently not liable to tax in India ? (iv) Whether on the facts and in the circumstances of the case the income arising to the applicant on the purchase of gold for the purpose of manufacturing gold jewellery for the purpose of export and export of the same constitutes income arising through or from the operations confined to purchase of goods in India for the purpose of export and hence does not accrue or arise in India and is consequently not liable to tax in India ? (v) Whether on the facts and in the circumstances of the case the income arising on the purchase and export of gold jewellery and the purchase of gold for the purpose of manufacturing gold jewellery for export and export the same by the applicant who is a non -resident would constitute income accruing or arising through or from the operations which are confined to purchase of goods in India for the purpose of export falling within Clauses (a) and (b) of Expln. 1 under Section 9(1)(i) and whether such income is not taxable in India ?
(3.) THE Director of IT (International Taxation), Chennai has taken the stand that application is liable to be rejected in terms of the proviso to Section 245R(2) of the IT Act. Section 245R(2) reads below: 245R. Procedure on receipt of application - -(1) On receipt of an application, the Authority shall cause a copy thereof to be forwarded to the Commissioner and, if necessary, call upon him to furnish the relevant records: Provided that where any records have been called for by the Authority in any case, such records shall, as soon as possible, be returned to the Commissioner. (2) 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 IT 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) involves determination of fair market value of any property; (iii) relates to a transaction or issue which is designed prima facie for the avoidance of income -tax [except in the case of a resident applicant falling in Sub -clause (iii)of Clause (b) of Section 245N)];


Click here to view full judgement.
Copyright © Regent Computronics Pvt.Ltd.