Scope and Limitations of Threshold Jurisdictional Reviews

Under Section 245R(2) of the Income Tax Act, 1961, statutory bodies such as the Authority for Advance Rulings are mandated to reject applications at the preliminary stage if the underlying transaction is "prima facie for the avoidance of income tax." The threshold standard of a "prima facie" finding requires only an initial, reasonable impression that a scheme is designed for tax avoidance, rather than absolute proof to the hilt. When prima facie evidence reveals that effective control and management lie outside the treaty jurisdiction and the structure was arranged to avoid tax, the statutory bar operates to deny advance rulings and direct the matter to regular assessment.(The authority for advance rulings Vs Tiger Global International II holdings) | 2026 INSC 60)