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TMI BlogClarifications on Rollback Provisions of Advance Pricing Agreement Scheme - Question and Answer format.X X X X Extracts X X X X X X X X Extracts X X X X ..... was notified vide S.O. 2005 (E), dated 30/8/2012 , thereby inserting Rules 10F to 10T and Rule 44GA in the Income-tax Rules, 1962 . 2. Rollback provisions in the APA Scheme were introduced through subsection (9A) inserted in section 92CC by the Finance (No. 2) Act, 2014 and the relevant rules, namely, Rules 10MA and 10RA , have been notified recently vide S.O. 758(E) dated 14th March, 2015 and S.O. 915(E) dated 1st April, 2015 . Subsequent to the notification of the rules, requests for clarification regarding certain issues have been received in the Central Board of Direct Taxes. In order to clarify such issues, the Board has decided to adopt a Question and Answer format and the clarifications are hereby provided as bel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her, it is not clear whether this restriction also applies to the Functions, Assets, Risks (FAR) analysis. Answer: The international transaction for which a rollback provision is to be allowed should be the same as the one proposed to be undertaken in the future years and in respect of which the agreement has been reached. There cannot be a situation where rollback is finalised for a transaction which is not covered in the agreement for future years. The term same international transaction implies that the transaction in the rollback year has to be of same nature and undertaken with the same associated enterprise(s), as proposed to be undertaken in the future years and in respect of which agreement has been reached. In the context ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication in a rollback year, then the applicant can apply for rollback for less than four years. Accordingly, if the covered international transaction(s) were not in existence during any of the rollback years, the applicant can apply for rollback for the remaining years. Similarly, if in any of the rollback years for the covered international transaction(s), the applicant fails the test of the rollback conditions contained in various provisions, then it would be denied the benefit of rollback for that rollback year. However, for other rollback years, it can still apply for rollback. Q.4 Rule 10 MA(3) states that the rollback provision shall not be provided in respect of an international transaction for a rollback year if the determinati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... des that rollback provision shall not be provided in respect of an international transaction for a rollback year if 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. It may be clarified whether the rollback provisions in such situations can be applied in a manner so as to ensure that the returned income or loss is accepted as the final income or loss after applying the rollback provisions. Answer: It is clarified that in case the terms of rollback provisions contain specific agreement between the Board and the applicant that the agreed determination of ALP or the agreed manner of determi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant and is applicable at its option. Accordingly, if the rollback provision cannot be given effect to for any of the rollback years on account of the applicant not taking the actions specified in sub-rules (2), (3), (4) or (6), the entire agreement gets vitiated and will have to be cancelled. Q.7 If there is a Mutual Agreement Procedure (MAP) application already pending for a rollback year, what would be the stand of the APA authorities? Further, what would be the view of the APA Authorities if MAP has already been concluded for a rollback year? Answer: If MAP has been already concluded for any of the international transactions in any of the rollback year under APA, rollback provisions would not be allowed for those internationa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e years? Answer: The applicant has an option to withdraw its roll back application even while maintaining the APA application for the future years. However, it is not possible to accept the rollback results without accepting the APA for the future years. It may also be noted that the fee specified in Rule 10MA(5) shall not be refunded even where a rollback application is withdrawn. Q.11 For already concluded APAs, will new APAs be signed for rollback or earlier APAs could be revised? Answer: The second proviso to Rule 10MA(5) provides for revision of APAs already concluded to include rollback provisions. Q.12 For already concluded APAs, where the modified return has already been filed for the first year of the AP ..... X X X X Extracts X X X X X X X X Extracts X X X X
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