Clause 107 - Advance pricing agreement - Direct Taxes Code Bill, 2009

Advance pricing agreement 107. (1) The Board, with the approval of the Central Government, may enter into an advance pricing agreement with any person in respect of the arm's length price in relation to an international transaction which may be entered into by that person on the basis of the prescribed method being the most appropriate method. (2) The arm's length price referred to in sub-section (1) shall be determined by the Board in the manner provided in sub-sections (1) to (4) of section 106. (3) However, the Board may make such other adjustments to the price determined under sub-section (2), as may be necessary or expedient to do so, to arrive at the arm's length price at which the advance pricing agreement may be entered into. (4) The arm's length price of any international transaction, in respect of which the advance pricing agreement has been entered into, shall be the arm's length price in relation to the international transaction for the purposes of this Code, regardless of anything to the contrary contained in any other provision of this Code. (5) The agreeement referred to in sub-section (1) shall be valid for such financial years as specified in the agreement which in no case shall exceed five consecutive financial years. (6) The advance pricing agreement entered into shall be binding only - (a) on the applicant in whose case the agreement has been entered into; (b) in respect of the transaction in relation to which the agreement has been entered into; and (c) on the Commissioner, and the income-tax authorities subordinate to him, in respect of the person and the said transaction. (7) However, the agreement referred to in sub-section (1) shall not be binding, if there is a change in law on the basis of which the agreement has been entered into. (8) The Board may, by order, declare an agreement to be void ab initio if it finds that the agreement has been obtained by the person by fraud or misrepresentation of facts. (9) Upon declaring the agreement to be void ab initio, all the provisions of this Code shall, after excluding the period beginning with the date of such agreement and ending with the date of order under sub-section (8), apply to the person as if such agreement had never been entered into. (10) A copy of the order made under sub-section (8) shall be sent to the person and the Commissioner. (11) For the purposes of this section, the Board may frame a Scheme, by notification in the Official Gazette, so as to enable it to enter into advance pricing agreement in respect of an international transaction.