Procedure for giving effect to rollback provision of an Agreement – Income-tax Rules

[TO BE PUBLISHED IN THE GAZETTE OF INDIA EXTRAORDINARY, PART
II, SECTION 3, 

SUB-SECTION (ii)] 

GOVERNMENT OF INDIA 

MINISTRY OF FINANCE

DEPARTMENT OF REVENUE 

[CENTRAL BOARD OF DIRECT TAXES]

 

Notification 

New Delhi, the 14th day of March, 2015 

 

INCOME-TAX

 

S.O. 758(E).-
In exercise of the powers conferred by sub-sections (9) and (9A) ofsection 92CC read with
section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of
Direct Taxes hereby makes the following rules further to amend the

 

Income-tax Rules,
1962, namely:-

 

1.           
(1).   These rules may be called the Income-tax
(Third Amendment) Rules,

2015.

(2).  
They shall come into force on the date of their publication in the
Official

Gazette.

 

2.           
In
the Income-tax Rules, 1962 (hereafter referred to as the principal rules), –

 

(a)   
in
rule 10 F,-

(i)  after clause (b), the
following clause shall be inserted, namely :-

“(ba)
“applicant” means a person who has made an application;”;

 

(ii)  after clause (h), the
following clause shall be inserted, namely :-

“(ha) “rollback year” means
any previous year, falling within the period not exceeding four previous years,
preceding the first of the previous years referred to in sub-section (4) of section
92CC;”;

 

(b)  in rule10 H, in
sub-rule (1),-

 

(i)  for the word “Every”
the word “Any” shall be substituted;

 

(ii)  for the word “shall”
the word “may” shall be substituted;

 

(c)  
in rule 10 I, for the words, figures and
letter “who has entered into a pre-filing consultation as referred to in rule
10H”, the words, figures and letter “referred to in rule 10 G” shall be
substituted; 

(d)   in
rule 10 K, in sub-rule (2) after the words “with understanding reached in”, the
word “any” shall be inserted;

 

(e)  
in rule 10 M, in sub-rule (1), after clause
(v), the following clause shall be inserted, namely:-

 

“(va) rollback provision referred to
in rule 10 MA;”;

 

(f) after rule 10 M, the following rule shall
be inserted, namely:-

 

Roll Back of the
Agreement.

 

10 MA. (1) Subject to the provisions of this
rule, the agreement may provide for determining the arm’s length price or
specify the manner in which arm’s length price shall be determined in relation
to the international transaction entered into by the person during the rollback
year (hereinafter referred to as “rollback provision”).

 

(2)     The
agreement shall contain rollback provision in respect of an international
transaction subject to the following, namely:-

(i)the international transaction is same as
the international transaction to which the agreement (other than the rollback
provision) applies;

(ii)   the
return of income for the relevant rollback year has been or is furnished by the
applicant before the due date specified in Explanation

2
to sub-section (1) of section 139;

 

(iii)   the
report in respect of the international transaction had been furnished in
accordance with section 92E;

(iv)  the
applicability of rollback provision, in respect of an international
transaction, has been requested by the applicant for all the rollback years in
which the said international transaction has been undertaken by the applicant;
and

(v)  
the
applicant has made an application seeking rollback in Form

 

3CEDA in accordance with sub-rule (5);

 

(3)   Notwithstanding
anything contained in sub-rule (2), rollback provision shall not be provided in
respect of an international transaction for a rollback year, if,-

(i)    the
determination of arm’s length price of the said international transaction for
the said year has been subject matter of an appeal before the

Appellate Tribunal and the Appellate Tribunal has passed
an order disposing of such appeal at any time before signing of the agreement;
or

(ii)     
the application of rollback provision has the
effect of reducing the total income or increasing the loss, as the case may be,
of the applicant as declared in the return of income of the said year.

 

 

(4)  
Where the rollback provision specifies the
manner in which arm’s length price shall be determined in relation to an
international transaction undertaken in any rollback year then such manner
shall be the same as the manner which has been agreed to be provided for
determination of arm’s length price of the same international transaction to be
undertaken in any previous year to which the agreement applies, not being a
rollback year.

 

(5)   The
applicant may, if he desires to enter into an agreement with rollback
provision, furnish along with the application, the request for the same in Form

No.
3 CEDA with proof of payment of an additional fee of five lakh rupees:

 

Provided that in a case where an application
has been filed prior to the 1st day of January, 2015, Form No. 3CEDA along with
proof of payment of additional fee may be filed at any time on or before the
31st day of March,

 

2015 or the date of entering into the
agreement whichever is earlier:

 

Provided further that in a case where an
agreement has been entered into before the 1st day of January, 2015, Form No.
3CEDA along with proof of payment of additional fee may be filed at any time on
or before the 31st day of March, 2015 and, notwithstanding anything contained
in rule 10 Q, the agreement may be revised to provide for rollback provision in
the said agreement in accordance with this rule.”;

 

(g)  in
rule 10 R, in sub-rule (1), in clause (iv), after the words, brackets, figures
and letter “under sub-rule (4) of rule 10Q”, the words, brackets, figures and
letters “or sub-rule (7) of rule 10 RA” shall be inserted;

 

(h)  after rule 10 R, the
following rule shall be inserted, namely:-

 

Procedure for
giving effect to rollback provision of an Agreement
.

 

10
RA.(1) The effect to the rollback provisions of an agreement shall be given in
accordance with this rule.

 

(2)              
The applicant shall furnish modified return
of income referred to in section 92CD in respect of a rollback year to which
the agreement applies along with the proof of payment of any additional tax
arising as a consequence of and computed in accordance with the rollback
provision.

 

(3)  The
modified return referred to in sub-rule(2) shall be furnished along with the
modified return to be furnished in respect of first of the previous years for
which the agreement has been requested for in the application.

 

 (4)   If
any appeal filed by the applicant is pending before the Commissioner (Appeals),
Appellate Tribunal or the High Court for a rollback year, on the issue which is
the subject matter of the rollback provision for that year, the said appeal to
the extent of the subject covered under the agreement shall be withdrawn by the
applicant before furnishing the modified return for the said year.

 

(5)  If any appeal filed
by the Assessing Officer or the Principal Commissioner

 

or Commissioner is pending before the Appellate Tribunal
or the High Court for a rollback year, on the issue which is subject matter of
the rollback provision for that year, the said appeal to the extent of the
subject covered under the agreement shall be withdrawn by the Assessing Officer
or the

Principal Commissioner or the Commissioner,
as the case may be, within three months of filing of modified return by the
applicant.

 

(6)   
The applicant, the Assessing Officer or the
Principal Commissioner or the Commissioner, shall inform the Dispute Resolution
Panel or the Commissioner (Appeals) or the Appellate Tribunal or the High
Court, as the case may be, the fact of an agreement containing rollback
provision having been entered into along with a copy of the same as soon as it
is practicable to do so.

 

(7)  In
case effect cannot be given to the rollback provision of an agreement in
accordance with this rule, for any rollback year to which it applies, on
account of failure on the part of applicant, the agreement shall be
cancelled.”;

 

(i) in Appendix-II of the principal rules,-

 

(A)  in
Form No. 3CEC, in item 10, after the words, “Number of years for which APA is
proposed to be applied”, the words “including the rollback years” shall be
inserted;

 

(B)  
in Form No. 3CED, in item 5, after sub-item
(e), the following shall be inserted, namely:-

 

“f. whether any
rollback request is being                            Yes/No

made .

g. If yes, enclose copy of

relevant Form No. 3CEDA.”;

 

(C) after Form No.
3CED, following Form shall be inserted, namely: – 

“Form
No. 3 CEDA

 

(See sub-rule (5) of rule 10 MA)

Application for
rollback of an Advance Pricing Agreement

 

To,

The Competent
Authority of India or

Director General of
Income Tax (International Taxation)

New Delhi

Sir/Madam,

 

This is to state that………………………… (Name
of the Applicant)……wishes to negotiate an APA with the Central Board of
Direct Taxes containing rollback provision. I am submitting herewith the
necessary particulars hereunder:

 

 

  1. Particulars of the applicant:

 

(a)  Full name of the
applicant:

 

(b)  Permanent Account
Number:

 

(c)  Address of the
applicant:

 

(d)  Address for
communication:

 

(e)  Location(s)
of the business enterprises in India:

 

(f)   Email
id and the contact numbers of the person with whom correspondence is required
to be made:

 

(g)  Names
and designation of the authorised representatives who would be appearing before
the authorities for negotiations of the APA:

 

  1. Whether
    pre-filing discussions in respect of rollback were sought by the
    applicant? If yes, please furnish:

 

(a)  Date
of application for pre-filing meeting:

(b)  Date of pre-filing
meeting(s) with the

 

APA
Team:

 

3.   
Whether application in Form 3CED is being
filed simultaneously:

4.   
Details
of international transaction(s) including

 

Name(s) of the Associated
Enterprises in respect of which rollback is requested for:

 

5.    Whether
the international transaction(s) is the same as that in respect of which APA
request is being made in Form 3CED by the applicant:

 

 

 

6.  Particulars of additional Fee paid by the
applicant:                   Amount in Rs.

 

Challan No: Dated:

7.      The
details of previous years for which rollback is being sought:

 

8.  Has
the same international transaction been undertaken in any other year for which
rollback is permissible but the same is not being requested for. If yes, the
reasons for the same be provided:

 

9.  
Period
of APA proposed along with the date

 

from
which APA is sought to be made applicable in the application in Form 3CED:

 

10. Whether return of income for all the
previous

years mentioned in 7 above have been
furnished

on or before the due
date:                                                                   Yes/No

 

 

11.  If
yes, provide details including acknowledgement No., date of furnishing etc.

 

12.  
Whether audit report under section 92 E in
respect of the international transaction referred to in 4 above for all the
previous years mentioned in 7 above have been furnished on or before the due
date:

Yes/No

 

13. If yes, provide details including date of
furnishing etc.

 

14.  Details
of pending proceedings including appeals for the years mentioned in 7 above in
respect of international transaction(s) mentioned in 4 above :

 

15.  Whether Appellate
Tribunal has disposed of any appeal in respect of
international transaction mentioned in 4 above for any of the years mentioned
in 7 above? if yes, then details may be provided:

 

I declare that the information furnished in the application
is correct and truly stated.

 

Yours faithfully,

 

Place:

 

Date:

 

Applicant

 

Notes:

 

1.               
The
Form shall be filed along with an application in Form 3CED for entering into an
APA.

 

2.              
If the space provided for answering any item
in the application is found insufficient, separate enclosures may be used for
the purpose. These enclosures should be signed by the person authorised to sign
the application in Form 3CED.

 

3.              
The Form shall be accompanied with proof of
having paid fee of five lakh rupees. This fee is in addition to any fee payable
along with Form 3CED.

 

4.               
The
application shall be accompanied by all the relevant documents.”.

 

 

 

[Notification No. 23/2015/ F.No.142
/14/2014-TPL]

 

 

 

(Amit Katoch)

 

Under Secretary (Tax
Policy and Legislation-I)

 

 

Note. – The principal rules
were published vide notification No. S.O.969 (E), dated the

26th March, 1962 and last
amended by Income-tax (Second Amendment) Rules, 2015 vide notification number
S.O. 350 (E), dated 04-02-2015.

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