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Company’s Name cannot be substituted under Rule 20:Advance Ruling

AIT News Network

New Delhi. Authority for Advance Rulings(Income Tax) while a recent ruling has dismissed the Petition of M/s Gameplan Sports Private Limited as misconceived .The applicant had asked for amendment in name of the company mentioned in the Application under Rule 20 of the Authority for Advance Ruling (Procedure) Rules , 1996.

The Facts: The applicant is an Indian company engaged in the business of management of sport events. On the assertion that it entered into an agreement with M/s Taj Television Ltd. PO Box 502018, Dubai Media City, Dubai , UAE on 10.05.2005 it sought advance ruling of the Authority on the following question :-

i. What is the nature of the contracted payment to be made Taj Television Ltd. (i.e whether this is royalty or business income in the hands of the recipient)?

ii. Whether the payment to be made to Taj Television Ltd. for purchase of advertising rights is taxable in India under the provisions of income tax Act, 1961 ?

iii. Whether resort can be taken to the Double Taxation Avoidance Agreement between India and UAE for determining taxability of the said payment ? if so , what is the article applicable for determining taxability of the said payment?

iv. Whether tax is required to be deducted at source before making the said payment?

During the course of hearing of the application on 23.11.2005 it became necessary to call for a copy of the UAE tax Decree and the certificate of incorporation of M/s Taj Television Ltd. in Dubai. At that stage the applicant come forward with the petition under rule 20 of the Authority for Advance Ruling (Procedure) Rules , 1996 for amendment of records.

It was stated in the application, inter alia that the Registered office of the Taj Television Ltd is at Mauritius and it is a resident of Mauritius.

On these facts the petitioner sought amendment of the application by substituting TAJ TELEVISION LTD Dubai with Taj TV Ltd. , Mauritius.

The Ruling: The petition under Rule 20 of the rules is misconceived .Rule 20 of the Rules read as follows:-

Rule 20 – Amendment of the Record

If at any stage of the proceedings before the Authority it appears that there is any factual of material error in the records the same shall be amended after hearing the applicant and the Commissioner.

A perusal of the Rule 20 of the Rules shows that what is permitted to be amended by way of amendment of records is any factual material error and such a amendment can be made at any stage of proceedings before the Authority. The real question, therefore, is whether on the facts and in the circumstances of the case can the rule be invoked to substitute one company for another company by way amendment of record.

From the above narration of facts, it appears to us that M/s Taj Television Ltd. Dubai and M/s Taj TV Ltd. Mauritius are two different companies. In the absence of any material or record we are also unable to accept that the Dubai Company is only a branch of Mauritius Company. The description given in the agreement, in respect of which advance ruling is sought in the application and other papers filed along with the application, the name of Dubai Company appears. Even if the name of Mauritius Company is permitted to be substituted in the application, the said company's tax liability cannot be determined as in the agreement the name of Dubai Company is entered. For these reasons, we dismiss the application filed under Rule 20 of the Rules by the applicant.

( Click here for full text of ruling AIT-2006-95-AAR )