Law:

Section:

Section 245R of the Income-tax Act, 1961 - Advance ruling - Procedure on receipt of application for - Applicant seeks advance ruling in respect of its obligation to deduct tax under section 195 in connection with contracts entered into by it with a foreign company 'R' - Revenue challenges maintainability of application contending that since identical question regarding R's liability to pay income-tax in India was pending before income-tax appellate authority, application for advance ruling is liable to be rejected in limine - Whether in case of appeal of 'R', its liability under provisions of Act, read with DTAA, arose for consideration directly and that is sole question to be decided in appeal, but in instant application, question to be decided at instance of applicant is about tax deduction at source; issues may be inter-related, but question raised before Authority cannot be said to be identical nor can it be said to be very same question pending determination by income-tax appellate authority - Held, yes - Whether therefore, applicant's right to have recourse to advance ruling on point of tax deduction cannot be defeated by reason of pendency of an appeal filed by 'R' and, thus, application is maintainable and is not hit by embargo laid down in clause (i) of proviso to section 245R(2) - Held, yes Section 90, read with section 195, of the Income-tax Act, 1961 and article 7 of the DTAA between India and USA - Double taxation relief - Where agreement exists - Applicant entered into two contracts of hardware repair and software maintenance with a foreign company 'R' - It seeks advance ruling in respect of its obligation to deduct tax under section 195 in connection with those contracts and rate at which tax has to be withheld in relation to payments made to 'R' on software maintenance contract - Whether payments received by 'R' from applicant in connection with hardware repair contract are not liable to be taxed in India by virtue of article 7 of DTAA and, therefore, applicant is not liable to deduct tax on payments made in respect of such contract - Held, yes - Whether payment received by 'R' in respect of software maintenance contract is liable to tax in…

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