Revision of Advance Pricing Agreement (APA) [ Rule 10Q ] - International Taxation - Income Tax

Revision of Advance Pricing Agreement (APA) [ Rule 10Q ] The revision of APA may be carried out in accordance with Rule 10Q. In case of revised agreement, the procedure as regard to original agreement shall be repeated. That is the taxpayer will be required to file the modified return for the period after the revision of the APA within three months and the assessing officer will reassess or recompute the total income of the relevant assessment year having regard to and in accordance with the revised agreement. Situation in which revised APA An agreement, subsequent to it having been entered into, may be revised by the Board, if.- ( a ) there is a change in critical assumptions or failure to meet a condition subject to which the agreement has been entered into; ( b ) there is a change in law that modifies any matter covered by the agreement but is not of the nature which renders the agreement to be non-binding; or ( c ) there is a request from competent authority in the other country requesting revision of agreement, in case of bilateral or multilateral agreement. [ Rule 10Q(1) ] APA Revised by An agreement may be revised by the Board either suo moto or on request of the assessee or the competent authority in India or the Director General of Income-tax (International Taxation). [ Rule 10Q(2) ] Except when the agreement is proposed to be revised on the request of the assessee, the agreement shall not be revised unless an opportunity of being heard has been provided to the assessee and the assessee is in agreement with the proposed revision. [ Rule 10Q(3) ] Revised agreement may be cancelled In case the assessee is not in agreement with the proposed revision the agreement may be cancelled in accordance with rule 10R . [ Rule 10Q(4) ] In case the Board is not in agreement with the request of the assessee for revision of the agreement, the Board shall reject the request in writing giving reason for such rejection. [ Rule 10Q(5) ] For the purpose of arriving at the agreement for the proposed revision, the procedure provided in rule 10L may be followed so far as they apply. [ Rule 10Q(6) ] Prescribed date of original and revision of APA The revised agreement shall include the date till which the original agreement is to apply and the date from which the revised agreement is to apply. [ Rule 10Q(7) ] Let under stand with an example. Let us assume that APA is signed with respect to A.Y. 2014-2015 to 2018-2019. The Agreement is signed on 31 December 2014 by which time the return of income for A.Y. 2014-2015 has already been filed in accordance with section 139 Of the Act. The assessee is required to file the modified return for A.Y. 2014-2015 by 31 March 2015. Subsequently, the APA is revised for A.Y. 2016-2017 to 2018-2019. The revised APA is signed on 31 December 2016, by which time the return of A.Y. 2016-2017 has already been filed in accordance with the provision Of section 139 and in compliance Of the terms Of the pre-revised APA. Now the assessee is required to file the modified return with respect to the A.Y. 2016-2017, by 31 March 2017, to give effect to the terms of the revised APA.