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Authority for advance rulings International Taxation MCQs

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June 9, 2022

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22 mins read

Authority for advance rulings in International Taxation MCQ are covered in this Article. Authority for advance rulings MCQ Test contains 39 questions. Answers to MCQ on Authority for advance rulings International Taxation are available after clicking on the answer.

1. The Authority for Advance Rulings (‘AAR’), gives  ruling relating to : –

a) Transaction which has been undertaken ;
b) Transaction which is proposed to be undertaken
c) Both A and B
d) None of the above

Answer

Answer: c) Both A and B


 

2. ………………….. can approach Authority for Advance Rulings (‘AAR’) for obtaining an Advance Ruling : –

a) All resident applicant
b) Specified resident applicant
c) A non-resident applicant
d) Both B and C

Answer

Answer: d) Both B and C


 

3. Which of the following provisions deal with the concept of Advance Ruling : –

a) Chapter XIX – B – Section 245N to 245V of the Income Tax Act, 1961;
b) Rules 44E and 44F of the Income-tax Rules,1962 ; and
c) the Authority for Advance Ruling (Procedure) Rules, 1996 [‘Rules’].
d) All of the above

Answer

Answer: d) All of the above


 

4. The threshold limit for approaching AAR for resident is transaction with a value of :-

a) Rs 100 Crores or more
b) Rs 50 crores or more
c) Rs 10 crores or more
d) Rs 1 crore or more

Answer

Answer: a) Rs 100 Crores or more


 

5.  MNC Ltd. UK, intends to sell goods to IMI Private Limited, an Indian company. They are not sure whether the income arising from such sale of goods would be liable to tax in India. MNC Ltd can approach ……………. to determine taxability of such proposed transaction : –

a) DRP
b) AAR
c) CIT (A)
d) ITAT

Answer

Answer: b) AAR


 

6. Which of the following are the advantages of Advance Ruling :-

a) It brings tax certainty for transactions ;
b) It determines Arm’s Length Price of International Transactions ;
c) It can be used to create double taxation ;
d) None of the above

Answer

Answer: a) It brings tax certainty for transactions ;


 

7. Advance Ruling can resolve complex issues arising under ……………, where a difference of opinion may exist :-

a) Income Tax Act, 1961
b) DTAA
c) Both Income Tax Act, 1961 and DTAA
d) None of the above

Answer

Answer: c) Both Income Tax Act, 1961 and DTAA


 

8. The rulings of the AAR are binding on the :-

a) The applicant who had sought it, in respect of the transaction in relation to which the ruling had been sought
b) Any person undertaking similar transaction, as one where ruling of AAR was pronounced
c) All income-tax authorities and appellate authorities
d) All of the above

Answer

Answer: a) The applicant who had sought it, in respect of the transaction in relation to which the ruling had been sought


 

9. The rulings of the AAR are binding on the :-

a) The Commissioner and all income tax authorities subordinate to him
b) Any person undertaking similar transaction, as the transaction, where ruling of AAR was pronounced
c) All income-tax authorities and appellate authorities
d) All of the above

Answer

Answer: a) The Commissioner and all income tax authorities subordinate to him


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10.  MNC Ltd. UK, obtained a ruling from the Authority for Advance Ruling (AAR) on a given set of facts for FY 2016-17 for a given agreement. The same agreement continued to work over the next 3 years and  there is no change in the facts or law. The benefit of the ruling of the AAR, shall be —- to MNC Ltd. UK –

a) Available
b) Not Available
c) Can’t say
d) None of the above

Answer

Answer: a) Available


 

Authority for advance rulings International Taxation MCQs

11. The AAR has to pronounce its ruling within a statutory time limit of ……… of the receipt of the application :-

a) 6 months
b) 3 months
c) 1 month
d) None of the above

Answer

Answer: a) 6 months


 

12. The AAR constituted by Central Government shall consist of : –

a) Chairman
b) Vice-Chairman
c) Member of Indian Revenue Service
d) All of the above

Answer

Answer: d) All of the above


 

13. The AAR shall consist of Chairman who has been a : –

a) Judge of Supreme Court / High Court for atleast 7 years
b) Chief Justice of High Court
c) Judge of a Tribunal
d) Both A and B

Answer

Answer: d) Both A and B


 

14. The AAR shall consist of Vice-Chairman who has been a : –

a) Judge of Supreme Court
b) Judge of High Court
c) Chief Justice of High Court
d) None of the above

Answer

Answer: b) Judge of High Court


 

15.  The AAR shall consist of member from IRS who is : –

a) Qualified to be a Member of CBDT
b) Member from Indian Customs and Central Excise Service
c) Who is or is qualified to be a Member of CBEC
d) Either of the above

Answer

Answer: d) Either of the above


 

16.  The AAR shall consist of member from Indian Legal Service who   : –

a) Qualified to be a Member of CBDT
b) Member from Indian Customs and Central Excise Service
c) Who is, or qualifies to be an Additional Secretary to Government of India
d) All of the above

Answer

Answer: c) Who is, or qualifies to be an Additional Secretary to Government of India


 

17.  The Authority of Advance Ruling shall be located in : –

a) Mumbai
b) The National Capital Territory of Delhi
c) Chennai
d) Ahmedabad

Answer

Answer: b) The National Capital Territory of Delhi


 

18.  The threshold limit of a transaction for approaching AAR is ………..when an application is made by a NR : –

a) Rs 1 crore
b) Rs 10 crore
c) Rs 100 crore
d) None of the above

Answer

Answer: d) None of the above – ReasonThere is no threshold limit for approaching AAR, when an application is made by Non-resident.


 

19.  Who can approach the AAR, for determination of the tax liability of the non-resident : –

a) The non-resident itself
b) Resident, in respect of transaction undertaken by them with the non-resident
c) Resident, for any transaction entered by party with the non-resident
d) Both A and B

Answer

Answer: d) Both A and B


 

20.  ……………….. can approach AAR in respect of an issue relating to computation of total income which is pending before the tax authority or the appellate authority

a) Public Sector Undertakings
b) Local Authority
c) Both A and B
d) None of the above

Answer

Answer: a) Public Sector Undertakings


 

Authority for advance rulings International Taxation MCQs

21.  An application for Advance Ruling cannot be made for the purpose of :-

a) Taxability of international transaction
b) Determination of Fair Market Value of a Transaction
c) Both A and B
d) None of the above

Answer

Answer: b) Determination of Fair Market Value of a Transaction


 

22.  An applicant, being a resident or non-resident, may approach AAR for the transaction to be undertaken to determine whether the same is ……………… for application of GAAR:-

a) Covered
b) Not covered
c) An impermissible Avoidance Arrangement
d) None of the above

Answer

Answer: c) An impermissible Avoidance Arrangement


 

23.  The applicant can raise …………. question in one application before AAR :-

a) 1 question
b) 2 questions
c) More than 1 question
d) All of the above

Answer

Answer: d) All of the above


 

24.  The questions raised before AAR may be on………………………pertaining to the income-tax liability (i.e. considering the provisions of the Act and/or the relevant DTAA) :-

a) Question of law
b) Question of fact
c) Mixed question of law and fact
d) All of the above

Answer

Answer: d) All of the above


 

25.  Advance ruling cannot be sought where :-

a) Question raised is pending before income tax authorities ;
b) Transaction is designed prima-facie for tax avoidance
c) Issue related to quantification of income
d) All of the above

Answer

Answer: d) All of the above


 

26. Advance ruling cannot be given on which of the following questions : –

a) Technical
b) Hypothetical
c) Academic
d) Both B and C

Answer

Answer: d) Both B and C


 

27. A Ltd. Filed an application for advance ruling in which it asked certain questions. During the course of ruling, it realize that it had missed to ask one additional question. As a general rule, can it raise and additional question, during the hearing if it was not included in the original application ?

a) Yes
b) No
c) May be
d) Can’t say

Answer

Answer: b) No


 

28.  X Ltd. filed an application for advance ruling in which it asked certain questions. During the course of ruling, it realize that it had made a genuine mistake in one of the question. As a general rule, during the hearing : –

a) Amendment  is never allowed
b) Amendment  is  always  allowed
c) Amendment  is   allowed only in deserving cases
d) All of the above

Answer

Answer: c) Amendment  is   allowed only in deserving cases


 

29.  Applicant can withdraw his application for advance ruling within …….. of the date of application :-

a) 60 days
b) 30 days
c) 90 days
d) None of the above

Answer

Answer: b) 30 days


International Taxation Services

30.  ……………….is possible against the order of AAR :-

a) Appeal
b) No appeal
c) Both A and B
d) None of the above

Answer

Answer: b) No appeal


 

Authority for advance rulings International Taxation MCQs

31.  AAR may declare its ruling as void-ab-initio when such ruling is sought :-

a) By fraud
b) By misrepresentation of facts
c) Both A and B
d) None of the above

Answer

Answer: c) Both A and B


 

32.  Application for Advance Ruling by a non-resident, shall be accompanied by a fee of  ……… , where amount of transaction proposed to be undertaken does not exceed Rs 100 crores :-

a) Rs 1 lakh
b) Rs 5 lakh
c) Rs 2 lakh
d) Rs 10 lakh

Answer

Answer: c) Rs 2 lakh


 

33.  Application for Advance Ruling by a non-resident shall be accompanied by a fee of  ……… where amount of transaction proposed to be undertaken exceeds Rs 100 crores but does not exceed Rs 300 crores :-

a) Rs 1 lakh
b) Rs 5 lakh
c) Rs 2 lakh
d) Rs 10 lakh

Answer

Answer: b) Rs 5 lakh


 

34.  Application for Advance Ruling by a non-resident ,shall be accompanied by a fee of  ……… where amount of transaction proposed to be undertaken exceeds Rs 300 crores :-

a) Rs 1 lakh
b) Rs 5 lakh
c) Rs 2 lakh
d) Rs 10 lakh

Answer

Answer: d) Rs 10 lakh


 

35.  Application for Advance Ruling by a PSU , shall be accompanied by a fee of  ……… where amount of transaction proposed to be undertaken exceeds Rs 300 crores :-

a) Rs 10,000
b) Rs 5 lakh
c) Rs 2 lakh
d) Rs 1 lakh

Answer

Answer: a) Rs 10,000


 

36.  Where there is a vacancy in the office of the chairman, by the reason of his death,  —-  Vice-Chairman shall act as the Chairman until new chairman enters upon his office : –

a) Any
b) Junior Most
c) Senior Most
d) None of the above

Answer

Answer: c) Senior Most


 

37.   An AAR was hearing an application of a non-resident. While the process of hearing was still on, the chairman  office fell vacant, as he resigned. The hearing continued, and the other members give a ruling. Such a ruling would be : –

a) Valid
b) Invalid
c) Void ab initio
d) None of the above

Answer

Answer: a) Valid


 

38.  X Inc, USA  filed an application before the AAR on a particular past transaction. Subsequent to the filing of the application, it received a notice of assessment from the tax office , wherein, the same transaction had taken place. Till such time the application is decided by the AAR : –

a) Assessment can continue in the normal course
b) AO cannot proceed to decide on the issue pending before the AAR
c) Assessment notice cannot be issued for such assessment year
d) All of the above

Answer

Answer: b) AO cannot proceed to decide on the issue pending before the AAR


 

39.  Where an application is rejected by the Aar, which of the following is True : –

a) Before rejecting the application, an opportunity of being heard shall be given to the applicant.
b) Reason for rejection shall be given in the order.
c) Copy of order shall be sent to the applicant and to the CIT.
d) All of the above

Answer

Answer: d) All of the above – Reason – No income tax authority or ITAT shall proceed to decide any issues in respect of which an application has been made by the Applicant.


 

Arinjay Jain

Bio of author

Arinjay is a Chartered Accountant with more than 20 years of post-qualification experience. He worked as Director, in the M&A Tax Division at KPMG in India. Presently, he is advising several MNCs in UAE on Economic Substance Regulations and impact of the UAE Corporate Tax Law on their business and clients across globe on International Tax issues . He is a well recognised Trainer of International Tax and UAE Corporate Tax. The areas of service include the following : - Advise and Compliance relating to International Tax Issues; Advise relating to UAE Corporate Tax Issues; Advise and Compliance relating to UAE Economic Substance Regulations; Advise and Compliance relating to Indian Income Tax Issues; Other connected matters from a Regulatory perspective.

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