I have become resident in India by the time I want an advance ruling, and I have filed my return in the meantime because the due date came round. Can the Authority still hear my application?
Yes, on both objections. The Authority held that residential status for Chapter XIX-B is tested by the financial year immediately preceding the year in which the application is made, so an American software manager who had become resident in 1994-95 was still a non-resident applicant when he applied on 31 March 1995. It also held that the bar in clause (a) of the proviso to s.245R(2) bites only where the question was already pending on the date of the application, so a return filed afterwards does not defeat it. On the merits it ruled that he was a technician in information technology within the notified field and entitled to exemption under s.10(5B). The ruling binds only Monte Harris.
Pronounced by the Authority for Advance Rulings (Authority for Advance Rulings - S. Ranganathan, Chairman, D.B. Lal and R.L. Meena, Members) on 1995-08-04, reported as [1996] 218 ITR 413 (AAR). It bears on section 10(5B), section 245N, section 245Q, section 245R, section 2(30), section 6(1) of the Income Tax Act 1961, in Capital Gains Exemptions, Salary & Perquisites and How Tax Law Is Read matters.
This is where the two standing answers to the Revenue's usual admission objections come from. The first is practical: residence cannot be tested by the year of the application, because an application filed early in a financial year would have to be admitted or refused before anyone could count the days. The second matters more - a non-resident who applies to the Authority must still file a return on time or face penal consequences, and the Authority refused to let that compelled step destroy the remedy. The Delhi High Court applied the same reading of 'already pending' in Hyosung Corporation v. Authority for Advance Rulings (11 February 2016). The exemption limb has no life left in it: s.10(5B) was omitted by the Finance Act 2002 with effect from 1 April 2003.
Binding only on the applicant who sought it, in respect of the transaction the ruling was sought on, and on the Principal Commissioner or Commissioner and the authorities subordinate to him in respect of that applicant and that transaction — and only until the law or the facts change (section 245S). It binds nobody else. The Tribunal and the courts nonetheless treat a considered ruling as persuasive, which is why practitioners cite them.
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Monte Harris, a citizen of the United States, had about twenty-five years of experience in hardware and software development for the point-of-sale industry with the US Government, RCA, Sperry Univac and ICL, and had been employed by Verifone Inc. of the USA since May 1992. He first came to India on 1 November 1992. From 1 April 1994 he was engaged as Engineering Manager, Network Systems and Integrated Systems Product Divisions, of Verifone India Private Limited, which was leading development of Omnihost 2.0, software for credit card transaction networks. VIPL paid him Rs. 18,170 a month with perquisites; Verifone Inc. paid him Rs. 47,38,773; and VIPL undertook to bear and pay the Indian tax on the whole. He was in India for 14 days in 1992-93, 137 days in 1993-94 and 303 days in 1994-95. He applied to the Authority on 31 March 1995 asking whether exemption under s.10(5B) was available and whether he was a technician for that purpose. He filed his return for assessment year 1995-96 on 15 June 1995, after the application, claiming the same exemption.
The application was maintainable and both questions were answered in the applicant's favour. On residence, the Authority held that for the purposes of s.245N read with s.245Q(1) the applicant's status is to be determined by reference to the financial year immediately preceding the financial year in which the application is made; the applicant was a non-resident in 1993-94 and so was a non-resident applicant, though resident in 1994-95. On the proviso to s.245R(2), it held that 'already pending' means pending as on the date of the application, so the return filed on 15 June 1995 did not attract clause (a). On the merits, the applicant's field fell within information technology as notified by Notification No. S.O. 569(E) dated 27 July 1993 under clause (iii) of the Explanation, so he was a technician; and all five conditions of s.10(5B) being satisfied, he was entitled to the exemption.
The Authority took the residence point on workability. Residence under the Act is a status referable to a previous year, not to a date, and s.245N does not say which previous year. If it were the year of the application, the Authority would often have to guess: an application presented soon after the start of a financial year, and disposed of before its close, would leave nobody able to say whether the applicant's stay would cross 182 days. A test has to work uniformly in every case, and only the immediately preceding financial year can be applied without ambiguity. The Authority noted that it had reached the same conclusion tentatively in Robert W. Smith, In re [1995] 212 ITR 275 (AAR) without finally deciding it. On the second objection it read the proviso against the statutory scheme it sits in. Filing a return is not a matter of the applicant's volition - the Act requires it early in the financial year and failure carries penal consequences - so an applicant who has gone to the Authority cannot be expected to stay silent before the Assessing Officer. Nor does the double track confer any advantage, because once the Authority rules, the income-tax authorities must give effect to that conclusion in the pending assessment and no appellate authority can give the applicant anything different. On the Revenue's reading a non-resident would forfeit Chapter XIX-B for no good reason. On the merits the Authority read the Explanation to s.10(5B) as a closed list of fields, found the applicant outside clauses (i) and (ii), and brought him within clause (iii) through the 1993 notification covering information technology including computer architecture systems, platforms and associated technology, software development process and tools.
This is a period with reference to which the residential status of the applicant in every case can be determined without any ambiguity whatsoever.
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Handle my notice → Ask a CA on WhatsAppYes, on both objections. The Authority held that residential status for Chapter XIX-B is tested by the financial year immediately preceding the year in which the application is made, so an American software manager who had become resident in 1994-95 was still a non-resident applicant when he applied on 31 March 1995. It also held that the bar in clause (a) of the proviso to s.245R(2) bites only where the question was already pending on the date of the application, so a return filed afterwards does not defeat it. On the merits it ruled that he was a technician in information technology within the notified field and entitled to exemption under s.10(5B). The ruling binds only Monte Harris. This was decided by the Advance Ruling (Authority for Advance Rulings - S. Ranganathan, Chairman, D.B. Lal and R.L. Meena, Members) and bears on section 10(5B), section 245N, section 245Q, section 245R, section 2(30), section 6(1) of the Income Tax Act 1961. It is reported as [1996] 218 ITR 413 (AAR). This is where the two standing answers to the Revenue's usual admission objections come from. The first is practical: residence cannot be tested by the year of the application, because an application filed early in a financial year would have to be admitted or refused before anyone could count the days. The second matters more - a non-resident who applies to the Authority must still file a return on time or face penal consequences, and the Authority refused to let that compelled step destroy the remedy. The Delhi High Court applied the same reading of 'already pending' in Hyosung Corporation v. Authority for Advance Rulings (11 February 2016). The exemption limb has no life left in it: s.10(5B) was omitted by the Finance Act 2002 with effect from 1 April 2003. If it applies to you, the first step is this: Test your applicant's residence against the financial year immediately preceding the year of the application, and put the day counts for each year in the application itself.
Monte Harris, a citizen of the United States, had about twenty-five years of experience in hardware and software development for the point-of-sale industry with the US Government, RCA, Sperry Univac and ICL, and had been employed by Verifone Inc. of the USA since May 1992. He first came to India on 1 November 1992. From 1 April 1994 he was engaged as Engineering Manager, Network Systems and Integrated Systems Product Divisions, of Verifone India Private Limited, which was leading development of Omnihost 2.0, software for credit card transaction networks. VIPL paid him Rs. 18,170 a month with perquisites; Verifone Inc. paid him Rs. 47,38,773; and VIPL undertook to bear and pay the Indian tax on the whole. He was in India for 14 days in 1992-93, 137 days in 1993-94 and 303 days in 1994-95. He applied to the Authority on 31 March 1995 asking whether exemption under s.10(5B) was available and whether he was a technician for that purpose. He filed his return for assessment year 1995-96 on 15 June 1995, after the application, claiming the same exemption. The matter was decided on 1995-08-04 by the Advance Ruling (Authority for Advance Rulings - S. Ranganathan, Chairman, D.B. Lal and R.L. Meena, Members). On those facts the Advance Ruling held as follows. The application was maintainable and both questions were answered in the applicant's favour. On residence, the Authority held that for the purposes of s.245N read with s.245Q(1) the applicant's status is to be determined by reference to the financial year immediately preceding the financial year in which the application is made; the applicant was a non-resident in 1993-94 and so was a non-resident applicant, though resident in 1994-95. On the proviso to s.245R(2), it held that 'already pending' means pending as on the date of the application, so the return filed on 15 June 1995 did not attract clause (a). On the merits, the applicant's field fell within information technology as notified by Notification No. S.O. 569(E) dated 27 July 1993 under clause (iii) of the Explanation, so he was a technician; and all five conditions of s.10(5B) being satisfied, he was entitled to the exemption.
The Authority took the residence point on workability. Residence under the Act is a status referable to a previous year, not to a date, and s.245N does not say which previous year. If it were the year of the application, the Authority would often have to guess: an application presented soon after the start of a financial year, and disposed of before its close, would leave nobody able to say whether the applicant's stay would cross 182 days. A test has to work uniformly in every case, and only the immediately preceding financial year can be applied without ambiguity. The Authority noted that it had reached the same conclusion tentatively in Robert W. Smith, In re [1995] 212 ITR 275 (AAR) without finally deciding it. On the second objection it read the proviso against the statutory scheme it sits in. Filing a return is not a matter of the applicant's volition - the Act requires it early in the financial year and failure carries penal consequences - so an applicant who has gone to the Authority cannot be expected to stay silent before the Assessing Officer. Nor does the double track confer any advantage, because once the Authority rules, the income-tax authorities must give effect to that conclusion in the pending assessment and no appellate authority can give the applicant anything different. On the Revenue's reading a non-resident would forfeit Chapter XIX-B for no good reason. On the merits the Authority read the Explanation to s.10(5B) as a closed list of fields, found the applicant outside clauses (i) and (ii), and brought him within clause (iii) through the 1993 notification covering information technology including computer architecture systems, platforms and associated technology, software development process and tools. In the words reproduced by the source cited on this page: "This is a period with reference to which the residential status of the applicant in every case can be determined without any ambiguity whatsoever."
It was decided by the Advance Ruling on 1995-08-04 and is reported as [1996] 218 ITR 413 (AAR). Binding only on the applicant who sought it, in respect of the transaction the ruling was sought on, and on the Principal Commissioner or Commissioner and the authorities subordinate to him in respect of that applicant and that transaction — and only until the law or the facts change (section 245S). It binds nobody else. The Tribunal and the courts nonetheless treat a considered ruling as persuasive, which is why practitioners cite them. An advance ruling binds only the applicant who sought it, only for the transaction it was sought on, and only the Commissioner and the officers under him in relation to that applicant and that transaction — and only until the law or the facts change. That is section 245S, and it means the ruling is not a precedent and binds nothing in your case. You cite it because the Authority reasoned the point out, often first and most fully, and the Tribunal and the courts treat a considered ruling as persuasive. Check before you rely on one: most of these were pronounced before 2009, and a great deal of cross-border tax has been rewritten since by amendment, protocol and judgment. On section 10(5B), section 245N, section 245Q, section 245R, section 2(30), section 6(1), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The application was maintainable and both questions were answered in the applicant's favour. On residence, the Authority held that for the purposes of s.245N read with s.245Q(1) the applicant's status is to be determined by reference to the financial year immediately preceding the financial year in which the application is made; the applicant was a non-resident in 1993-94 and so was a non-resident applicant, though resident in 1994-95. On the proviso to s.245R(2), it held that 'already pending' means pending as on the date of the application, so the return filed on 15 June 1995 did not attract clause (a). On the merits, the applicant's field fell within information technology as notified by Notification No. S.O. 569(E) dated 27 July 1993 under clause (iii) of the Explanation, so he was a technician; and all five conditions of s.10(5B) being satisfied, he was entitled to the exemption. It arises in Capital Gains Exemptions, Salary & Perquisites and How Tax Law Is Read matters, on section 10(5B), section 245N, section 245Q, section 245R, section 2(30), section 6(1) of the Income Tax Act 1961, and was decided by Authority for Advance Rulings - S. Ranganathan, Chairman, D.B. Lal and R.L. Meena, Members. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. File the return when it falls due even after applying to the Authority, and say in the application that you are doing so as a protective step. If the Revenue objects that the question is pending, pin the objection to the date of the application: what happened afterwards is beside the point. Do not carry the s.10(5B) half of this ruling into any live matter - the clause was omitted with effect from 1 April 2003.
Superseded by amendment. The substantive limb is gone. The departmental text of s.10 at incometaxindia.gov.in carries the annotation 'Omitted by the Finance Act, 2002, w.e.f. 1-4-2003' against clause (5B), so nothing turns any longer on who is a technician under it. The two procedural holdings survive and have been applied: the Delhi High Court in Hyosung Corporation v. Authority for Advance Rulings (11 February 2016) recorded that in Monte Harris 'it was clarified that the words "already pending" in Section 245R should be interpreted to mean "already pending as on the date of the application and not with reference to any future date"', and held that the mere filing of a return does not make the question pending. The Indian Kanoon cited-by list for this ruling shows eight documents, seven of them Authority rulings between 1995 and 2007 and the Hyosung judgment; each was identified from that listing and the Hyosung judgment was read, the Authority rulings were not. The Authority for Advance Rulings has since been replaced by the Boards for Advance Rulings constituted by Notification No. 96/2021 dated 1 September 2021, whose rulings are appealable to the High Court under s.245W, and the Income-tax Act 1961 has been replaced by the Income-tax Act 2025 with effect from 1 April 2026. That finding was checked against a published source, which is linked on this page, on 2026-08-23. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
An advance ruling binds only the applicant who sought it, only for the transaction it was sought on, and the Commissioner and the income-tax authorities under him in relation to that applicant and that transaction. It holds only so long as the law and the facts on which it was given stay as they were. It binds nobody else, though a considered ruling is treated as persuasive. On this ruling: the Authority recorded that no information was furnished about the applicant's academic qualifications or degrees, and rested the technician finding on his stated work experience alone. It did not decide how much of the salary paid by the US parent was taxable, or for how long the forty-eight month period in s.10(5B) would run - only that the five conditions were met. The reported citation is the equivalent citation printed on the Indian Kanoon page and has not been checked against the ITR volume. The ruling does not say what the applicant's qualifications were, does not quantify the exempt salary, and does not deal with the interaction between the exemption and the tax borne by the employer beyond reciting the condition. Whether the residence test in paragraph 8 has been applied by the Boards for Advance Rulings since 2021 was not traced. The reported citation was not checked against the ITR volume. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The application was maintainable and both questions were answered in the applicant's favour. On residence, the Authority held that for the purposes of s.245N read with s.245Q(1) the applicant's status is to be determined by reference to the financial year immediately preceding the financial year in which the application is made; the applicant was a non-resident in 1993-94 and so was a non-resident applicant, though resident in 1994-95. On the proviso to s.245R(2), it held that 'already pending' means pending as on the date of the application, so the return filed on 15 June 1995 did not attract clause (a). On the merits, the applicant's field fell within information technology as notified by Notification No. S.O. 569(E) dated 27 July 1993 under clause (iii) of the Explanation, so he was a technician; and all five conditions of s.10(5B) being satisfied, he was entitled to the exemption.
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