Clause 118 - Advance pricing agreement. - Direct Taxes Code, 2010

Advance pricing agreement. 118. (1) The Board, with the approval of the Central Government, may enter into an advance pricing agreement with any person, specifying the manner in which arm's length price is to be determined in relation to an international transaction, to be entered into by that person. (2) The manner of determination of arm's length price referred to in sub-section (1) may be any method including one of the prescribed methods, as referred to in sub-section (1) of section 117, with such adjustments or variations, as may be necessary or expedient so to do. (3) The arm's length price of any international transaction, in respect of which the advance pricing agreement has been entered into, notwithstanding anything in this Chapter, shall be determined in accordance with the advance pricing agreement so entered. (4) The agreement 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. (5) The advance pricing agreement entered into shall be binding— (a) only on the person in whose case the agreement has been entered into; (b) only 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, only in respect of the said person and the said transaction. (6) The agreement referred to in sub-section (1) shall not be binding, if there is any amendment to the Code having bearing on the agreement so entered. (7) 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. (8) Upon declaring the agreement void ab initio, 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 (7), apply to the person as if such agreement had never been entered into. (9) For the purposes of this section, the Board may, by notification, frame a Scheme for advance pricing agreement in respect of an international transaction.