Provisions for Roll Back in APA Scheme [ Section 92CC(9A) read with rule 10MA ] - International Taxation - Income Tax

Provisions for Roll Back in APA Scheme [ Section 92CC(9A) read with Rule 10MA ] The agreement referred to in section 92CC(1), may, subject to such conditions, procedure and manner as may be prescribed, provide for determining the- (a) arm s length price or specify the manner in which the arm s length price shall be determined in relation to the international transaction entered into by the person; (b) income referred to in section 9(1)(i), or specifying the manner in which the said income is to be determined, as is reasonably attributable to the operations carried out in India by or on behalf of that person, being a non-resident, during any period not exceeding four previous years preceding the first of the previous years for which the APA applies in respect of the International transaction to be undertaken. The CBDT has, vide Notification No. 23/2015 dated 14.03.2015, in exercise of the power conferred by 92CC(9A), read with section 295, notified following conditions, procedure and manner for determining the arm length price or for specifying the manner in which arm length price is to be determined in relation to an international transaction. Who is applicant Applicant means a person who has made an application. [ Rule 10F(ba) ] Meaning of Rollback years 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 section 92CC(4). [ Rule 10F(ha) ] Rollback of the agreement [ Rule 10MA ] 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 ). [ Rule 10MA(1) ] Conditions for applying for rollback provisions [ Rule 10MA(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 of section 139(1); (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 rule 10MA(5); Non-applicability of Rollback provision [ Rule 10MA(3) ] 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. Manner of determining arm length price to be the same for rollback years and other previous years [ Rule 10MA(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. Time Limit for filling application for rollback provision [ Rule 10MA(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. 3CEDA with proof of payment of an additional fee of five lakh rupees: In a case where an application has been filed on or before the 31 st day of March, 2015, Form No. 3CEDA along with proof of payment of additional fee may be filed at any time on or before the 30th day of June, 2015 or the date of entering into the agreement whichever is earlier. In a case where an agreement has been entered into on or before the 31st day of March, 2015, Form No. 3CEDA along with proof of payment of additional fee may be filed at any time on or before the 30th day of June, 2015 and, notwithstanding anything contained in rule 10Q , the agreement may be revised to provide for rollback provision in the said agreement in accordance with this rule. Subsequent to the notification of the rules, the CBDT has issued Circular No. 10/2015 dated 10.06.2015 adopting FAQ format to clarify certain issues arising out of the said rules.