Section 245V of the Income-tax Act, 1961: Procedure of the Authority for Advance Rulings

Section 245V empowered the Authority for Advance Rulings (AAR) to regulate its own procedure, subject to the statutory provisions governing advance rulings. This guide explains the provision, its limits, and the changes to the advance-ruling system.

Legal status: Section 245V is a provision of the Income-tax Act, 1961. The advance-ruling system was substantially reorganised by the Finance Act, 2021, with the introduction of the Board for Advance Rulings. The Income-tax Act, 2025 took effect from 1 April 2026. This page explains the 1961 provision for historical and transitional reference; do not assume that the former AAR procedure governs a new application.

Text of Section 245V

“The Authority shall, subject to the provisions of this Chapter, have power to regulate its own procedure in all matters arising out of the exercise of its powers under this Act.”

Meaning and scope of Section 245V

The provision gave the AAR a measure of procedural autonomy: it could determine how to conduct matters arising from its statutory functions where the legislation did not prescribe an exclusive method. The opening words, subject to the provisions of this Chapter, are important. They mean that an internal procedural direction could not override a statutory requirement.

In practical terms, the provision concerned the conduct of advance-ruling proceedings, rather than the power to create new categories of applicants, alter the statutory jurisdiction, or dispense with a hearing required by law.

Key legal expressions explained

Authority for Advance Rulings

The AAR was the statutory body constituted under the advance-rulings chapter of the 1961 Act to decide eligible questions about the tax treatment of specified transactions. Its constitution was addressed in Section 245O.

Advance ruling

An advance ruling is a determination sought in advance on a question within the scope of the statutory advance-ruling mechanism. The definitions and eligible applicants under the earlier law were addressed in Section 245N.

Regulate its own procedure

This refers to control over the conduct of proceedings within the limits of the governing Act and applicable rules. It is not a power to change substantive tax liability or disregard express statutory safeguards.

Limits on the procedural power

Statutory primacy: the procedure had to conform to Chapter XIX-B of the 1961 Act and applicable rules.
Opportunity of hearing: rights expressly provided under the governing provisions could not be displaced by an internal procedural rule.
Jurisdiction: Section 245V did not enlarge the questions the authority was authorised to decide.
Reasoned decisions and communication: applicable requirements concerning orders, rulings and service remained relevant.

Section 245Q dealt with applications for advance rulings. Section 245R addressed the treatment of applications, hearings and pronouncement of rulings. Section 245U concerned the powers of the authority. Section 245V operated alongside these provisions, filling procedural gaps rather than superseding them.

Later changes: Board for Advance Rulings and the 2025 Act

The Finance Act, 2021 introduced the Board for Advance Rulings framework, including Section 245-OB of the 1961 Act, and transitional arrangements for pending matters. The procedural framework for the Board must be distinguished from the former AAR's power under Section 245V. The e-Advance Rulings Scheme, 2022 also established electronic procedures for covered Board proceedings.

The Income-tax Act, 2025, effective from 1 April 2026, reorganised the income-tax legislation. For any new or continuing matter, the relevant commencement, repeal, saving and transitional provisions, together with the rules and scheme applicable to that proceeding, must be checked. The historical wording of Section 245V should not be treated as a standalone statement of the current procedure.

Practical example

Under the former AAR framework, the authority might specify the order for filing additional documents or arrangements for hearing a matter, provided its directions were consistent with Chapter XIX-B and applicable rules. It could not use Section 245V to remove a hearing safeguard expressly required by the Act or to decide a question outside its jurisdiction.

Frequently asked questions

Did Section 245V give the AAR unlimited discretion?

No. Its power to regulate procedure was expressly subject to the other provisions of the advance-rulings chapter.

Was Section 245V a provision about tax rates or exemptions?

No. It addressed the procedure of the former advance-ruling authority, not substantive rates, deductions or exemptions.

Does Section 245V automatically govern Board for Advance Rulings cases?

No. The Board operates under the applicable statutory framework and notified procedural scheme. The correct law depends on the proceeding and relevant transitional rules.

Official legal references

Editorial note: This is general legal information, not advice on the maintainability or procedure of a particular advance-ruling application. Check the legislation, notifications and rules applicable to the relevant period.