JUDGMENT

Rajiv Shakdher, J. -- By this writ petition, the petitioner seeks to challenge the advance ruling of the Authority for Advance Rulings (Income Tax), New Delhi (hereinafter referred to as "the Authority") dated 26-5-2004 passed in A.A.R. No. 608/2003 pursuant to an application made by the petitioner under Section 245Q(1) of the Income Tax Act, 1961 (hereinafter referred to as "the Act").

2. In the application filed under Section 245Q(1) of the Act by the petitioner before the Authority, it had sought an advance ruling by the Authority with respect to the following question:

"Whether any income is accrued/deemed to be accrued in India from the activities carried out by the Company in India?"

2.1 The aforesaid question was posed by the writ petitioner in the background of the following facts as stated in its application to the Authority.

2.2 The petitioner is a limited liability company incorporated in the United Arab Emirates ("UAE"), with its head office at Abu Dhabi. The petitioner is engaged, among others, in offering remittance services for transferring of monies from UAE to various places in India. In order to facilitate the said purpose, the petitioner had opened liaison offices in India on 1-1-1997 under a licence granted by the Reserve Bank of India ("RBI") vide its communication dated 24-9-1996. As per the RBI communication dated 24-9-1996, the petitioner's liaison offices, in India, are permitted to undertake only the following activities :

2.3 By the very same communication, the RBI has specifically prohibited the petitioners' liaison offices, in India, from charging any commission or fee or from receiving or earning any remittances from any activity undertaken by them. Furthermore, the expenses of the liaison offices in India are required to be met exclusively out of the funds received from abroad through normal banking channels.

2.4 Pursuant to the aforesaid permission granted by the RBI, the petitioner set up its first liaison office in Cochin, in the State of Kerala, in January, 1997. At present, the petitioner has liaison offices in Cochin, Chennai, New Delhi, Mumbai and Jalandhar in India.

2.5 It is the stand of the petitioner both before the authority below, as well as, before this court, that, through its six liaison offices, in India, it provides certain "auxiliary" services to Non-Resident Indians ("NRI") in UAE to remit funds either on their account or for the benefit of their relatives/dependents. For the said purpose, a contract between the NRI remitter and the petitioner is executed in UAE, whereupon the NRI hands over his or her funds for remittance to the petitioner at any of the centres/ outlets/ camps of the petitioner in UAE. Each such transaction is a separate contract between the NRI remitter and the petitioner; governed by the UAE laws. Upon funds being collected, the petitioner makes an electronic remittance of the funds on behalf of its NRI customers" in either of the two ways:

2.6 In the second option, the liaison offices in India download the particulars of remittances through the electronic media and then print cheques/drafts drawn on the banks in India, which, in turn, are couriered/despatched to the beneficiaries in India, in accordance, with the instructions