Case nº AAR Nos. 612 and 613 of 2003 of Authority for Advance Rulings, March 30, 2005 (case In Re: Rotem Company; In Re: Mitsubhishi Corporation Vs)

JudgeFor Appellant: M.S. Syali, Adv. and For Respondents: Akhilesh Ranjan, Adv. for the CIT
PresidentSyed Shah Mohammed Quadri, J. (Chairman), K.D. Singh and A.S. Narang, Members
Resolution DateMarch 30, 2005


Syed Shah Mohammed Quadri, J. (Chairman)

  1. These applications under Section 245Q(1) of the IT Act, 1961 (for short the 'Act'), are placed before us for passing orders under Sub-section (2) of Section 245R of the Act. They have passed through several vicissitudes. It would be enough to record that the order passed under Sub-section (2) of Section 245R of the Act on 17th March, 2004, was recalled on the application of the CIT on 22nd Nov., 2004.

    It would be appropriate to note the factual background which is common to both the applications. M/s Rotem Company (the applicant, in AAR/612/2003-for short, the first applicant), M/s Mitsubishi Corporation (the applicant in AAR/613/2003-for short, the second applicant) and M/s Mitsubishi Electric Corporation, Japan, constituted a consortium under the leadership of the second applicant. The consortium submitted tender for design, manufacture, supply, testing, and commissioning of passenger rolling stock for the Delhi Metro Rail Corporation. (DMRC). On the acceptance of the tender, the consortium entered into contract with DMRC on 22nd May, 2001 (hereinafter referred to as "RS1"). Under the RS1, a fixed lump sum comprising of INR 3,110,439,836 and US $ 260,997,269 was payable by DMRC as consideration to the consortium which was to be apportioned amongst A to Z cost centres identified as per the chart in para 12 of Annex.-III. On these facts, the applicants set out questions in their applications, which are similar, to seek advance ruling of the Authority.

  2. The CIT raised objection as to the maintainability of the applications on the ground that the questions raised by the applicants were pending before the IT authorities and in view of Clause (i) of Sub-section (2) of Section 245R of the Act, they are liable to be rejected. This was done after the said order of 17th March, 2004. It is stated that in the financial year 2001-02, the second applicant filed an application under Section 197 of the Act seeking determination of rate of tax for TDS. Similar applications were also filed in respect of financial years 2002-03 and 2003-04. The Dy. Director (IT) (for short the DDIT) disposed of the applications for financial years 2001-02 and 2002-03, prescribing the rate of tax for purposes of deduction of tax at source (TDS) @ 20 per cent. Petitions were moved before the Director of IT (for short-DIT) under Section 264 of the Act, challenging the rate of tax fixed by DDIT. The rate of tax in respect...

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