Chapter 23: Board for Advance Rulings (BAR) Proceedings
1. Evolution from AAR to BAR (Sections 245N to 245W)
The Authority for Advance Rulings (AAR) was replaced by the Board for Advance Rulings (BAR) consisting of two members not below the rank of Chief Commissioner of Income-tax:
| Parameter | Erstwhile AAR | Board for Advance Rulings (BAR) |
|---|---|---|
| Composition | Chaired by retired Supreme Court / High Court judge. | Two IRS officers (Chief Commissioners). |
| Binding Effect | Binding on applicant and Department on that transaction. | Not binding; appealable by either party! |
| Right of Appeal | No statutory appeal (only Article 226/136 writ). | Statutory appeal to High Court within 60 days. |
2. Eligible Applicants & Prescribed Forms
| Applicant Category | Prescribed Form | Transaction Scope |
|---|---|---|
| Non-Resident | Form 34C | Any transaction undertaken or proposed to be undertaken in India. |
| Resident with Non-Resident | Form 34D | Tax liability of a non-resident arising out of a transaction with the resident applicant. |
| Resident High Net-Worth Corporate | Form 34DA | Resident computing tax liability arising from one or more transactions aggregating ≥ ₹ 100 Crores. |
| Public Sector Undertaking (PSU) | Form 34E | Any question of law or fact arising out of assessment proceedings. |
| Resident / Non-Resident for GAAR | Form 34EA | Determination of whether an arrangement is an Impermissible Avoidance Arrangement u/s 144BA. |
3. Procedural Timelines & Statutory Bar (Sec 245R)
BAR shall NOT ALLOW an application where the question raised:
- Is already pending before any income-tax authority, ITAT, or Court (except for PSUs).
- Involves determination of Fair Market Value of any property.
- Relates to a transaction which is prima facie designed for the avoidance of income-tax (except for GAAR applicants).
• Disposal Deadline: BAR shall pronounce its ruling in writing within 6 months from the date of receipt of the application.
• Withdrawal of Application: Applicant may withdraw application within 30 days from the date of the application.
• Withdrawal of Application: Applicant may withdraw application within 30 days from the date of the application.
4. Right of Appeal to High Court (Section 245W)
The applicant or the Assessing Officer, if aggrieved by any ruling or order passed by the BAR, may appeal to the High Court within 60 days from the date of communication of the ruling.
• High Court may allow filing within a further period of 30 days if satisfied of sufficient cause.
• High Court may allow filing within a further period of 30 days if satisfied of sufficient cause.
5. High-Yield Exam Traps
Trap 1: BAR ruling is NO LONGER binding!
Unlike erstwhile AAR rulings which were binding, a BAR order is subject to regular statutory appeal before the High Court by either the taxpayer or the Commissioner!
Unlike erstwhile AAR rulings which were binding, a BAR order is subject to regular statutory appeal before the High Court by either the taxpayer or the Commissioner!
Trap 2: Pendency before AO is a complete bar!
If a Section 143(2) notice was already issued before filing the BAR application, the application will be rejected as pending proceedings under Section 245R(2)!
If a Section 143(2) notice was already issued before filing the BAR application, the application will be rejected as pending proceedings under Section 245R(2)!