I want the four rollback years with my APA. Can I pick only the years that help me, and what will knock rollback out before I start?
You cannot pick and choose: the applicant has to either apply for all the four years or not apply at all, subject only to the transaction not existing in a year or the rollback conditions failing in a year. Rollback is not available for a year in which the return was filed under s.139(4), nor where the Tribunal has finally disposed of the appeal on the arm's length price of that transaction, and it can never reduce the total income or increase the loss declared in the return.
Decided by the CBDT Circulars & Instructions (Central Board of Direct Taxes, APA-II Section) on 2015-06-10, reported as Circular No. 10/2015 dated 10 June 2015, F. No. 500/7/2015-APA-II, 8 pages, in question and answer form with 14 questions.. It bears on section 92CC, section 92CC(9A), section 92CD, section Rule 10MA, section Rule 10RA, section 139(1), section 139(4), section 139(5) of the Income Tax Act 1961, in Assessment & Scrutiny, How Tax Law Is Read and Appeals matters.
Rollback is where most of the money is in an APA, and whether a year qualifies is settled at the application stage, not later. This circular is the instrument that decides it, and several of its answers — the s.139(4) bar, the all-four-years rule, the MAP election, the consequences of default in one rollback year — have no counterpart anywhere else.
Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them.
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The Advance Pricing Agreement scheme was introduced in 2012 by ss.92CC and 92CD with corresponding rules in the Income-tax Rules 1962. Rollback provisions were added by the Finance (No. 2) Act 2014 and the implementing rules were notified in March and April 2015. Requests for clarification having been received from stakeholders, the Board adopted a question and answer format and issued 14 questions with answers.
The circular clarifies, among other things: a return revised under s.139(5) attracts rollback where the original return was filed by the due date, but rollback is not available on a return filed under s.139(4) (Q.1); 'same' in Rule 10MA(2)(i) means a transaction of the same nature undertaken with the same associated enterprises, and the functions, assets and risks must not differ materially from those validated for the APA years, material meaning a change which could reasonably have resulted in an agreement with significantly different terms (Q.2); the applicant has to either apply for all the four years or not apply at all, with exceptions where the transaction did not exist in a year or the applicant fails a rollback condition for a year (Q.3); an order of the Appellate Tribunal 'disposing' of an appeal under Rule 10MA(3) means a final determination of the facts by the ITAT as the final fact finding authority, so a set-aside for fresh consideration does not bar rollback, and there is no conflict with the withdrawal requirement in Rule 10RA(4) (Q.4); where rollback would reduce the total income or increase the loss declared, the agreement may provide that the agreed determination of the arm's length price or the agreed manner of determination be modified so that the declared income is not reduced — on the illustration, declared income of Rs. 100, adjusted income of Rs. 120 and a rollback result of Rs. 90 gives a final figure of Rs. 100 (Q.5); if the applicant fails to carry out what Rule 10RA(2), (3), (4) or (6) requires for any one rollback year, the entire agreement shall be cancelled (Q.6); where MAP has been concluded for a transaction in a rollback year, rollback is not available for that transaction in that year, and where a MAP request is pending, either MAP or the rollback application shall be proceeded with for that year (Q.7); the arm's length price can differ from year to year but the manner of its determination, including the choice of method, the comparability analysis and the tested party, must remain the same (Q.8); the compliance audit for rollback years is primarily to check whether the agreed price or manner was applied in the modified return, and critical assumptions need not be revalidated (Q.9); the applicant may withdraw the rollback application while keeping the APA application for the future years alive, but cannot accept the rollback result without accepting the APA for the future years, and the fee under Rule 10MA(5) is not refundable (Q.10); an already concluded APA can be revised to incorporate rollback under the second proviso to Rule 10MA(5) (Q.11); in that case the time limit for filing the modified return for the rollback years runs from the date of signing the revised APA incorporating rollback (Q.12); and on a merger or a demerger only the person who makes the APA application or enters into the agreement is entitled to rollback, for transactions it undertook in the rollback years (Q.13 and Q.14).
The circular is administrative clarification rather than reasoned decision, but the thread through it is that rollback is a benefit attached to the APA and cannot be detached from it or used selectively. Hence the all-or-nothing rule across the four years, the cancellation of the entire agreement if the applicant defaults in any one rollback year, the refusal to let the rollback result be accepted without the forward APA, and the confinement of the benefit to the applicant itself on a merger or demerger. The second thread is the primacy of domestic finality and of other resolution routes: a final ITAT determination of the arm's length price closes the year, a concluded MAP closes the transaction for that year, and a pending MAP forces an election. The third is that rollback is a relief mechanism and not a refund mechanism, so it can never take the total income below, or the loss above, what the return declared.
applicant has to either apply for all the four years or not apply at all
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Handle my notice → Ask a CA on WhatsAppYou cannot pick and choose: the applicant has to either apply for all the four years or not apply at all, subject only to the transaction not existing in a year or the rollback conditions failing in a year. Rollback is not available for a year in which the return was filed under s.139(4), nor where the Tribunal has finally disposed of the appeal on the arm's length price of that transaction, and it can never reduce the total income or increase the loss declared in the return. This was decided by the CBDT Circulars & Instructions (Central Board of Direct Taxes, APA-II Section) and bears on section 92CC, section 92CC(9A), section 92CD, section Rule 10MA, section Rule 10RA, section 139(1), section 139(4), section 139(5) of the Income Tax Act 1961. It is reported as Circular No. 10/2015 dated 10 June 2015, F. No. 500/7/2015-APA-II, 8 pages, in question and answer form with 14 questions.. Rollback is where most of the money is in an APA, and whether a year qualifies is settled at the application stage, not later. This circular is the instrument that decides it, and several of its answers — the s.139(4) bar, the all-four-years rule, the MAP election, the consequences of default in one rollback year — have no counterpart anywhere else. If it applies to you, the first step is this: Check for each of the four rollback years how the return was filed. A return revised under s.139(5) qualifies if the original went in by the due date; a return filed under s.139(4) does not.
The Advance Pricing Agreement scheme was introduced in 2012 by ss.92CC and 92CD with corresponding rules in the Income-tax Rules 1962. Rollback provisions were added by the Finance (No. 2) Act 2014 and the implementing rules were notified in March and April 2015. Requests for clarification having been received from stakeholders, the Board adopted a question and answer format and issued 14 questions with answers. The matter was decided on 2015-06-10 by the CBDT Circulars & Instructions (Central Board of Direct Taxes, APA-II Section). On those facts the CBDT Circulars & Instructions held as follows. The circular clarifies, among other things: a return revised under s.139(5) attracts rollback where the original return was filed by the due date, but rollback is not available on a return filed under s.139(4) (Q.1); 'same' in Rule 10MA(2)(i) means a transaction of the same nature undertaken with the same associated enterprises, and the functions, assets and risks must not differ materially from those validated for the APA years, material meaning a change which could reasonably have resulted in an agreement with significantly different terms (Q.2); the applicant has to either apply for all the four years or not apply at all, with exceptions where the transaction did not exist in a year or the applicant fails a rollback condition for a year (Q.3); an order of the Appellate Tribunal 'disposing' of an appeal under Rule 10MA(3) means a final determination of the facts by the ITAT as the final fact finding authority, so a set-aside for fresh consideration does not bar rollback, and there is no conflict with the withdrawal requirement in Rule 10RA(4) (Q.4); where rollback would reduce the total income or increase the loss declared, the agreement may provide that the agreed determination of the arm's length price or the agreed manner of determination be modified so that the declared income is not reduced — on the illustration, declared income of Rs. 100, adjusted income of Rs. 120 and a rollback result of Rs. 90 gives a final figure of Rs. 100 (Q.5); if the applicant fails to carry out what Rule 10RA(2), (3), (4) or (6) requires for any one rollback year, the entire agreement shall be cancelled (Q.6); where MAP has been concluded for a transaction in a rollback year, rollback is not available for that transaction in that year, and where a MAP request is pending, either MAP or the rollback application shall be proceeded with for that year (Q.7); the arm's length price can differ from year to year but the manner of its determination, including the choice of method, the comparability analysis and the tested party, must remain the same (Q.8); the compliance audit for rollback years is primarily to check whether the agreed price or manner was applied in the modified return, and critical assumptions need not be revalidated (Q.9); the applicant may withdraw the rollback application while keeping the APA application for the future years alive, but cannot accept the rollback result without accepting the APA for the future years, and the fee under Rule 10MA(5) is not refundable (Q.10); an already concluded APA can be revised to incorporate rollback under the second proviso to Rule 10MA(5) (Q.11); in that case the time limit for filing the modified return for the rollback years runs from the date of signing the revised APA incorporating rollback (Q.12); and on a merger or a demerger only the person who makes the APA application or enters into the agreement is entitled to rollback, for transactions it undertook in the rollback years (Q.13 and Q.14).
The circular is administrative clarification rather than reasoned decision, but the thread through it is that rollback is a benefit attached to the APA and cannot be detached from it or used selectively. Hence the all-or-nothing rule across the four years, the cancellation of the entire agreement if the applicant defaults in any one rollback year, the refusal to let the rollback result be accepted without the forward APA, and the confinement of the benefit to the applicant itself on a merger or demerger. The second thread is the primacy of domestic finality and of other resolution routes: a final ITAT determination of the arm's length price closes the year, a concluded MAP closes the transaction for that year, and a pending MAP forces an election. The third is that rollback is a relief mechanism and not a refund mechanism, so it can never take the total income below, or the loss above, what the return declared. In the words reproduced by the source cited on this page: "applicant has to either apply for all the four years or not apply at all"
It was decided by the CBDT Circulars & Instructions on 2015-06-10 and is reported as Circular No. 10/2015 dated 10 June 2015, F. No. 500/7/2015-APA-II, 8 pages, in question and answer form with 14 questions.. Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them. A CBDT circular or instruction binds officers of the department but not the assessee and not the courts. Where a circular helps you, you may hold the department to it. Where it hurts you, it cannot override the Act or a judgment. On section 92CC, section 92CC(9A), section 92CD, section Rule 10MA, section Rule 10RA, section 139(1), section 139(4), section 139(5), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. The circular clarifies, among other things: a return revised under s.139(5) attracts rollback where the original return was filed by the due date, but rollback is not available on a return filed under s.139(4) (Q.1); 'same' in Rule 10MA(2)(i) means a transaction of the same nature undertaken with the same associated enterprises, and the functions, assets and risks must not differ materially from those validated for the APA years, material meaning a change which could reasonably have resulted in an agreement with significantly different terms (Q.2); the applicant has to either apply for all the four years or not apply at all, with exceptions where the transaction did not exist in a year or the applicant fails a rollback condition for a year (Q.3); an order of the Appellate Tribunal 'disposing' of an appeal under Rule 10MA(3) means a final determination of the facts by the ITAT as the final fact finding authority, so a set-aside for fresh consideration does not bar rollback, and there is no conflict with the withdrawal requirement in Rule 10RA(4) (Q.4); where rollback would reduce the total income or increase the loss declared, the agreement may provide that the agreed determination of the arm's length price or the agreed manner of determination be modified so that the declared income is not reduced — on the illustration, declared income of Rs. 100, adjusted income of Rs. 120 and a rollback result of Rs. 90 gives a final figure of Rs. 100 (Q.5); if the applicant fails to carry out what Rule 10RA(2), (3), (4) or (6) requires for any one rollback year, the entire agreement shall be cancelled (Q.6); where MAP has been concluded for a transaction in a rollback year, rollback is not available for that transaction in that year, and where a MAP request is pending, either MAP or the rollback application shall be proceeded with for that year (Q.7); the arm's length price can differ from year to year but the manner of its determination, including the choice of method, the comparability analysis and the tested party, must remain the same (Q.8); the compliance audit for rollback years is primarily to check whether the agreed price or manner was applied in the modified return, and critical assumptions need not be revalidated (Q.9); the applicant may withdraw the rollback application while keeping the APA application for the future years alive, but cannot accept the rollback result without accepting the APA for the future years, and the fee under Rule 10MA(5) is not refundable (Q.10); an already concluded APA can be revised to incorporate rollback under the second proviso to Rule 10MA(5) (Q.11); in that case the time limit for filing the modified return for the rollback years runs from the date of signing the revised APA incorporating rollback (Q.12); and on a merger or a demerger only the person who makes the APA application or enters into the agreement is entitled to rollback, for transactions it undertook in the rollback years (Q.13 and Q.14). It arises in Assessment & Scrutiny, How Tax Law Is Read and Appeals matters, on section 92CC, section 92CC(9A), section 92CD, section Rule 10MA, section Rule 10RA, section 139(1), section 139(4), section 139(5) of the Income Tax Act 1961, and was decided by Central Board of Direct Taxes, APA-II Section. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Test the rollback transaction against the covered transaction: it must be of the same nature and undertaken with the same associated enterprises, and the functions, assets and risks must not differ materially from those validated for the future years. Apply for all four years unless the transaction did not exist in a year or a rollback condition fails for that year, and record on the application why any year is left out. For any rollback year where an appeal is pending, plan the withdrawal required by Rule 10RA; if the Tribunal has already decided the arm's length price of that transaction on the facts, that year is out, though a set-aside for fresh consideration is not a final disposal. Where a MAP request is pending for a rollback year, choose: either MAP or the rollback application is proceeded with for that year, not both. Where MAP has already concluded for a transaction in a year, rollback is not available for that transaction in that year.
Searched for later treatment; none was found. That is not the same as a source affirming it. No later CBDT circular or instruction revising, withdrawing or supplementing Circular No. 10/2015 was located, and no judicial decision construing it was found. It was issued in June 2015 against the rollback rules as notified in March and April 2015; Rule 10MA and Rule 10RA have been amended since, so check the current text of the rules before relying on any answer that turns on a sub-rule number. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The circular was opened at the CBDT's own copy. The site's fetch layer would not return the answers verbatim at length, so the substance of each of the 14 answers was read out question by question with a short verbatim phrase from each; long passages are therefore paraphrased here and not quoted, and anyone citing a specific answer in a proceeding should quote it from the PDF itself. The signature block, name and designation at the foot of the circular could not be read from the copy returned, so the issuing officer is not named here. The Q.5 illustration is recorded as the circular gives it (declared 100, adjusted 120, rollback result 90, final 100). The discovery record described the answers to Q.1, Q.3 and Q.4 accurately. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The circular clarifies, among other things: a return revised under s.139(5) attracts rollback where the original return was filed by the due date, but rollback is not available on a return filed under s.139(4) (Q.1); 'same' in Rule 10MA(2)(i) means a transaction of the same nature undertaken with the same associated enterprises, and the functions, assets and risks must not differ materially from those validated for the APA years, material meaning a change which could reasonably have resulted in an agreement with significantly different terms (Q.2); the applicant has to either apply for all the four years or not apply at all, with exceptions where the transaction did not exist in a year or the applicant fails a rollback condition for a year (Q.3); an order of the Appellate Tribunal 'disposing' of an appeal under Rule 10MA(3) means a final determination of the facts by the ITAT as the final fact finding authority, so a set-aside for fresh consideration does not bar rollback, and there is no conflict with the withdrawal requirement in Rule 10RA(4) (Q.4); where rollback would reduce the total income or increase the loss declared, the agreement may provide that the agreed determination of the arm's length price or the agreed manner of determination be modified so that the declared income is not reduced — on the illustration, declared income of Rs. 100, adjusted income of Rs. 120 and a rollback result of Rs. 90 gives a final figure of Rs. 100 (Q.5); if the applicant fails to carry out what Rule 10RA(2), (3), (4) or (6) requires for any one rollback year, the entire agreement shall be cancelled (Q.6); where MAP has been concluded for a transaction in a rollback year, rollback is not available for that transaction in that year, and where a MAP request is pending, either MAP or the rollback application shall be proceeded with for that year (Q.7); the arm's length price can differ from year to year but the manner of its determination, including the choice of method, the comparability analysis and the tested party, must remain the same (Q.8); the compliance audit for rollback years is primarily to check whether the agreed price or manner was applied in the modified return, and critical assumptions need not be revalidated (Q.9); the applicant may withdraw the rollback application while keeping the APA application for the future years alive, but cannot accept the rollback result without accepting the APA for the future years, and the fee under Rule 10MA(5) is not refundable (Q.10); an already concluded APA can be revised to incorporate rollback under the second proviso to Rule 10MA(5) (Q.11); in that case the time limit for filing the modified return for the rollback years runs from the date of signing the revised APA incorporating rollback (Q.12); and on a merger or a demerger only the person who makes the APA application or enters into the agreement is entitled to rollback, for transactions it undertook in the rollback years (Q.13 and Q.14).
TaxSphere, “CBDT Circular No. 10/2015 — APA rollback”, https://taxnotice.vittsphere.com/caselaw/case/cbdt-circular-10-2015-apa-rollback-all-four-years-or-none/ (validity last checked 2026-09-16)
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My advance pricing agreement covers five years. What about the year just outside it - can the agreed margin be held against me, or held to my benefit, for that year?
My APA has expired. The TPO now wants to benchmark an open year against the margin agreed in it. Can he?
The Board wants to revise, or to cancel, my advance pricing agreement. On what grounds can it, and what am I entitled to before it does?
Your APA has no rollback for the year under appeal. Can you still make the TPO benchmark that year on the APA's method and tested party?
