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The Authority for Advance Rulings (AAR) Chairman Justice (retd) V.S. Sirpurkar on Thursday admitted to huge pendency of applications before the quasi judicial body while laying the blame for the situation to poor infrastructure and inadequate cooperation from the income tax department.
Over 500 applications (spanning last three years) are pending before the AAR, Sirpurkar said at the 3rd Global Tax Summit, organised by Confederation of Indian Industry (CII) here.
"I don’t want to justify this delay", Sirpurkar said.
The interesting aspect is that about 90 per cent of these applications are from foreign companies who are keen to invest in India and had approached AAR to get some certainty on the tax treatment of their proposed transactions.
Atleast 30-40 applications related to the question of applicability of minimum alternate tax (MAT) on foreign companies -an issue that was recently resolved by the Supreme Court.
Commenting on the poor infrastructure, Sirpurkar highlighted that he was not referring to providing of chairs or computers, but to larger issues like appointments of members.
"Till two months back, I did not have a Law Member. Only a little later after December 4 (when I Joined AAR) was technical member appointed. So what I am saying is at least make the appointments in time. At least make sure that those who are appointed get proper opportunity to work".
The other interesting aspect is that Vice Chairman of AAR is yet to be appointed. Without the Vice Chairman, how will the benches in Bombay, Kolkata work?
"These are infrastructure problems that have to be seriously addressed. Unless these problems are not addressed, things will not work. It is nice to say that everything depends on the credibility of AAR and developed countries are looking at us for tax certainty", Sirpurkar said.
SIX MONTHS RULE
Sirpurkar highlighted that there was a provision which required applications before AAR to be disposed off as far as possible in six months.
"Lawyers, income tax department have put that provision into disuse. Nobody bothers that the query has to be answered within time as the date for disposal of the matter is six months. It’s a common experience", he said.
The income tax department would do well to remove this clause as they don’t seem to be serious about it.
"Time has come - especially when whole world is interested in putting India on their wish list - to very seriously consider whether the clause has to be removed or not. It is time for income tax department to act".
On their part, lawyers should not be interested in pendency and seek frequent adjournments, but work towards early disposal of matter, he added.
Later, responding to Sirpurkar’s remarks, the Central Board of Direct Taxes Chairperson Anita Kapur said that she would instruct her officers to refrain from seeking frequent adjournments.
She also said that senior officials of the tax department have been asked to appear before AAR so that the legal issues could be well explained and matters disposed off quickly.
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