An agreement has been made between Orange Inc., a company registered in Country A, and Unicorn Ltd., an Indian company, to provide technical…
CA Final · Direct Tax Laws and International Taxation · MTP · January 2026
An agreement has been made between Orange Inc., a company registered in Country A, and Unicorn Ltd., an Indian company, to provide technical know-how. Orange Inc.'s sister company, XYZ LLC of Country A, has received an Advance Ruling about a similar technological know-how arrangement with another Indian business, MNC Ltd. The agreement is expected to be of 350 crores and expected tax liability would be 120 crores. Can Unicorn Ltd. make an application to the Board for Advance Rulings to issue same ruling for Unicorn Limited in accordance with the Act? Examine whether the Board can ask for the submission of books of accounts when a decision on a related matter has already been made. Examine in the context of the provisions of the Income-tax Act, 1961?
Suggested Answer and Working Notes:
A resident can make an application for advance ruling in relation to his tax liability arising out of one or more transactions valuing 100crore or more in total which has been undertaken or is proposed to be undertaken. Since the value of transactions between M/s Unicorn Ltd and M/s Orange Inc for providing technical knowhow exceeds 100crores, Unicorn Ltd. can make an application for advance ruling with the Board for Advance Rulings. As per section 245U, the Board for Advance Rulings shall have all the powers of the Civil Court in respect of discovery and inspection, enforcing the attendance of any person, including any officer of a banking company and examining on oath, issuing commissions and compelling the production of books of accounts and other documents. Accordingly, the Board can ask for the production of books of accounts before passing advance ruling for Unicorn Ltd.
Topics: Advance Rulings
Related Questions in this Topic
- Explain the correctness or otherwise of the following statements giving proper reasons thereof: (i) Mr. Jatin, a residen...
- M/s XYZ Limited, an Indian company engaged in providing Engineering Consultancy Services, entered into negotiations with...
- Explain the nexus approach recommended by OECD in BEPS Action Plan 5 which has been adopted in the Income-tax Act, 1961.
- M/s Solar Ltd., an Indian public sector company, wants to seek advance ruling from the Board for Advance Rulings (BAR) i...
- Explain the correctness or otherwise of the following statements giving proper reasons thereof: Mr. Karan Malhotra, a r...