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?
Section 92CC(4) caps the agreement at such period not exceeding five consecutive previous years as may be specified in it, and s.92CC(3) gives the agreement its force only "in respect of which the advance pricing agreement has been entered into". Sub-section (9A) extends that backwards, but only so far: an agreement may, subject to prescribed conditions, determine the arm's length price or the attributable income for any period not exceeding four previous years preceding the first of the years covered by sub-section (4), and rule 10F(ha) calls those the rollback years. A year outside the five plus four is outside the agreement, and the Pune Bench has held in Tetra Pak India that the window works against the department too: the TPO may not benchmark an uncovered year against the margin agreed in the APA.
Decided by the CBDT Circulars & Instructions (Not applicable — statutory text) on 2012-07-01, reported as Section 92CC inserted by s.40 of the Finance Act 2012 with effect from 1 July 2012. It bears on section 92CC, section 92CC(3), section 92CC(4), section 92CC(5), section 92CC(9A), section 92CD, section Rule 10F, section Rule 10MA, section Rule 10RA of the Income Tax Act 1961, in Assessment & Scrutiny and How Tax Law Is Read matters.
The year immediately before or after an APA period is where most of the argument happens: the functions, the risks and the method are the same, and the margin has been examined and accepted by the Board for the adjoining years. The distinction that decides how the point is pleaded is between a statutory entitlement and an evidentiary argument. For the assessee wanting the agreed margin applied to an uncovered year, s.92CC gives nothing beyond the rollback route, and what is left is evidence of functions and comparability. But the limit is symmetrical, and that is the practical value of it: on Tetra Pak India Pvt Ltd v DCIT (ITAT Pune, 17 July 2026) it is the Revenue that has been stopped, the Bench holding that for the TPO to compare the margin agreed in an APA with the actual margin of a year which is not a covered year of that APA is inappropriate and against the provisions of the Act. A practitioner meeting a show-cause notice that re-benchmarks an open year off an expired APA has a decided answer to it.
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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Section 92CC(4) reads: "The agreement referred to in sub-section (1) shall be valid for such period not exceeding five consecutive previous years as may be specified in the agreement." Sub-section (3) provides that notwithstanding s.92C or s.92CA or the methods provided by rules made under the Act, the arm's length price of any international transaction or the income referred to in clause (b) of sub-section (1), in respect of which the advance pricing agreement has been entered into, shall be determined in accordance with the agreement. Sub-section (5) makes the agreement binding on the person in whose case, and in respect of the transaction in relation to which, the agreement has been entered into, and on the Principal Commissioner or Commissioner and the income-tax authorities subordinate to him in respect of that person and that transaction. Sub-section (9A) permits the agreement, subject to such conditions, procedure and manner as may be prescribed, to determine the arm's length price or the attributable income "during any period not exceeding four previous years preceding the first of the previous years referred to in sub-section (4)". Rule 10F(ha) defines a "rollback year" as any previous year falling within the period not exceeding four previous years preceding the first of the previous years referred to in sub-section (4) of section 92CC. Sub-section (10) provides that where an application is made for entering into an agreement, the proceeding shall be deemed to be pending in the case of the person for the purposes of the Act.
The statutory position is that the agreement operates within a defined window and not outside it. The maximum forward term is five consecutive previous years, specified in the agreement itself; the maximum backward extension is four previous years preceding the first of those, and only where the agreement so provides on the prescribed conditions. Sections 92CC(3) and (5) tie the displacement of s.92C and s.92CA, and the binding force on the Commissioner and his subordinates, to the transaction in respect of which the agreement was entered into. For a previous year outside that window the ordinary transfer pricing machinery applies and the agreed price is not binding on either side - a limit the Pune Bench has enforced against the Revenue in Tetra Pak India, holding that the TPO's approach of comparing the margin agreed in an APA covering assessment years 2014-15 to 2018-19 with the actual margin of assessment year 2020-21, which is not a covered year of that APA, is inappropriate and against the provisions of the Act, and restoring the issue to the Assessing Officer and the TPO for fresh adjudication (paras 78 and 79).
The limits are structural rather than incidental. Section 92CC(3) is the provision that displaces s.92C and s.92CA, and it does so only in respect of the transaction covered by the agreement; s.92CC(4) fixes how long that cover lasts; s.92CC(5) fixes on whom and in respect of what it binds. An agreement is entered into on critical assumptions, as rule 10F(f) defines them — factors so critical that neither party will continue to be bound if any of them changes — and it is accompanied by an annual compliance report under rule 10-O and a compliance audit under rule 10P for each covered year. None of that apparatus exists for an uncovered year, which is why the rollback route in s.92CC(9A) had to be created by amendment rather than being read into the section. What survives for the uncovered year is the factual material generated in the APA process, which goes to characterisation and comparability in the ordinary way.
shall be valid for such period not exceeding five consecutive previous years as may be specified in the agreement
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Handle my notice → Ask a CA on WhatsAppSection 92CC(4) caps the agreement at such period not exceeding five consecutive previous years as may be specified in it, and s.92CC(3) gives the agreement its force only "in respect of which the advance pricing agreement has been entered into". Sub-section (9A) extends that backwards, but only so far: an agreement may, subject to prescribed conditions, determine the arm's length price or the attributable income for any period not exceeding four previous years preceding the first of the years covered by sub-section (4), and rule 10F(ha) calls those the rollback years. A year outside the five plus four is outside the agreement, and the Pune Bench has held in Tetra Pak India that the window works against the department too: the TPO may not benchmark an uncovered year against the margin agreed in the APA. This was decided by the CBDT Circulars & Instructions (Not applicable — statutory text) and bears on section 92CC, section 92CC(3), section 92CC(4), section 92CC(5), section 92CC(9A), section 92CD, section Rule 10F, section Rule 10MA, section Rule 10RA of the Income Tax Act 1961. It is reported as Section 92CC inserted by s.40 of the Finance Act 2012 with effect from 1 July 2012. The year immediately before or after an APA period is where most of the argument happens: the functions, the risks and the method are the same, and the margin has been examined and accepted by the Board for the adjoining years. The distinction that decides how the point is pleaded is between a statutory entitlement and an evidentiary argument. For the assessee wanting the agreed margin applied to an uncovered year, s.92CC gives nothing beyond the rollback route, and what is left is evidence of functions and comparability. But the limit is symmetrical, and that is the practical value of it: on Tetra Pak India Pvt Ltd v DCIT (ITAT Pune, 17 July 2026) it is the Revenue that has been stopped, the Bench holding that for the TPO to compare the margin agreed in an APA with the actual margin of a year which is not a covered year of that APA is inappropriate and against the provisions of the Act. A practitioner meeting a show-cause notice that re-benchmarks an open year off an expired APA has a decided answer to it. If it applies to you, the first step is this: Read the agreement's own term first. Section 92CC(4) sets a ceiling, not a fixed period, so the agreement may specify fewer than five previous years.
Section 92CC(4) reads: "The agreement referred to in sub-section (1) shall be valid for such period not exceeding five consecutive previous years as may be specified in the agreement." Sub-section (3) provides that notwithstanding s.92C or s.92CA or the methods provided by rules made under the Act, the arm's length price of any international transaction or the income referred to in clause (b) of sub-section (1), in respect of which the advance pricing agreement has been entered into, shall be determined in accordance with the agreement. Sub-section (5) makes the agreement binding on the person in whose case, and in respect of the transaction in relation to which, the agreement has been entered into, and on the Principal Commissioner or Commissioner and the income-tax authorities subordinate to him in respect of that person and that transaction. Sub-section (9A) permits the agreement, subject to such conditions, procedure and manner as may be prescribed, to determine the arm's length price or the attributable income "during any period not exceeding four previous years preceding the first of the previous years referred to in sub-section (4)". Rule 10F(ha) defines a "rollback year" as any previous year falling within the period not exceeding four previous years preceding the first of the previous years referred to in sub-section (4) of section 92CC. Sub-section (10) provides that where an application is made for entering into an agreement, the proceeding shall be deemed to be pending in the case of the person for the purposes of the Act. The matter was decided on 2012-07-01 by the CBDT Circulars & Instructions (Not applicable — statutory text). On those facts the CBDT Circulars & Instructions held as follows. The statutory position is that the agreement operates within a defined window and not outside it. The maximum forward term is five consecutive previous years, specified in the agreement itself; the maximum backward extension is four previous years preceding the first of those, and only where the agreement so provides on the prescribed conditions. Sections 92CC(3) and (5) tie the displacement of s.92C and s.92CA, and the binding force on the Commissioner and his subordinates, to the transaction in respect of which the agreement was entered into. For a previous year outside that window the ordinary transfer pricing machinery applies and the agreed price is not binding on either side - a limit the Pune Bench has enforced against the Revenue in Tetra Pak India, holding that the TPO's approach of comparing the margin agreed in an APA covering assessment years 2014-15 to 2018-19 with the actual margin of assessment year 2020-21, which is not a covered year of that APA, is inappropriate and against the provisions of the Act, and restoring the issue to the Assessing Officer and the TPO for fresh adjudication (paras 78 and 79).
The limits are structural rather than incidental. Section 92CC(3) is the provision that displaces s.92C and s.92CA, and it does so only in respect of the transaction covered by the agreement; s.92CC(4) fixes how long that cover lasts; s.92CC(5) fixes on whom and in respect of what it binds. An agreement is entered into on critical assumptions, as rule 10F(f) defines them — factors so critical that neither party will continue to be bound if any of them changes — and it is accompanied by an annual compliance report under rule 10-O and a compliance audit under rule 10P for each covered year. None of that apparatus exists for an uncovered year, which is why the rollback route in s.92CC(9A) had to be created by amendment rather than being read into the section. What survives for the uncovered year is the factual material generated in the APA process, which goes to characterisation and comparability in the ordinary way. In the words reproduced by the source cited on this page: "shall be valid for such period not exceeding five consecutive previous years as may be specified in the agreement"
It was decided by the CBDT Circulars & Instructions on 2012-07-01 and is reported as Section 92CC inserted by s.40 of the Finance Act 2012 with effect from 1 July 2012. 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(3), section 92CC(4), section 92CC(5), section 92CC(9A), section 92CD, section Rule 10F, section Rule 10MA, section Rule 10RA, 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 statutory position is that the agreement operates within a defined window and not outside it. The maximum forward term is five consecutive previous years, specified in the agreement itself; the maximum backward extension is four previous years preceding the first of those, and only where the agreement so provides on the prescribed conditions. Sections 92CC(3) and (5) tie the displacement of s.92C and s.92CA, and the binding force on the Commissioner and his subordinates, to the transaction in respect of which the agreement was entered into. For a previous year outside that window the ordinary transfer pricing machinery applies and the agreed price is not binding on either side - a limit the Pune Bench has enforced against the Revenue in Tetra Pak India, holding that the TPO's approach of comparing the margin agreed in an APA covering assessment years 2014-15 to 2018-19 with the actual margin of assessment year 2020-21, which is not a covered year of that APA, is inappropriate and against the provisions of the Act, and restoring the issue to the Assessing Officer and the TPO for fresh adjudication (paras 78 and 79). It arises in Assessment & Scrutiny and How Tax Law Is Read matters, on section 92CC, section 92CC(3), section 92CC(4), section 92CC(5), section 92CC(9A), section 92CD, section Rule 10F, section Rule 10MA, section Rule 10RA of the Income Tax Act 1961, and was decided by Not applicable — statutory text. 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. Before arguing the adjoining year, check whether it can be brought inside the agreement as a rollback year under s.92CC(9A) read with rules 10MA and 10RA - four previous years preceding the first of the covered years, on the prescribed conditions. If it is the TPO who is importing the APA margin into an open year, take the limit as a limit on him: s.92CC(3) and (5) tie the agreement to the transaction and the years covered, and Tetra Pak holds that benchmarking an uncovered year against the agreed margin is against the provisions of the Act. If it is you who wants the agreed margin for an uncovered year, do not plead the agreement as binding. Plead it as evidence of functions, risks and comparability - what the Board accepted about the characterisation, the critical assumptions and the most appropriate method for the adjoining years, and the absence of any change in the year in dispute. Put the annual compliance report in Form 3CEF and the signed agreement on the record if you take that course, because that is the material from which the characterisation accepted by the Board can be shown.
Still good law. Sub-sections (4) and (9A) as set out here are the text the Income-tax Department currently publishes on its section 92CC page, which carries a 2025 year stamp. On the department's 2021 edition of the section the only amendment footnotes are two notes recording substitution by Act No. 12 of 2020 with effect from 1 April 2020, which attach to the clauses dealing with income referred to in s.9(1)(i) in sub-sections (1) and (9A); sub-section (4) carries no amendment footnote at all and stands as inserted by the Finance Act 2012. The department also publishes the corresponding provision of the Income-tax Act 2025 as s.168, whose sub-section (4) keeps the same cap, expressed as a period not exceeding five consecutive tax years. The five-year limit in sub-section (4) has been applied by the Tribunal: by the Pune Bench in Tetra Pak India Private Limited v. DCIT, Circle-7, Pune, ITA No. 1906/PUN/2024, assessment year 2020-21, pronounced 17 July 2026, and in the Pune Bench's earlier order in DCIT v. AGS Customer Services India Pvt Ltd, ITA No. 162/Pun/2022, which Tetra Pak reproduces at para 76 and which reverses a Commissioner (Appeals) finding as going against s.92CC(4) read with sub-section (9A). Nothing doubting or reading down the limit was located. 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.
A decided case applying s.92CC(4) to the question this entry frames has now been found and this note corrects an earlier version of it, which said that none could be found. Tetra Pak India Private Limited v. Deputy Commissioner of Income Tax, Circle-7, Pune, ITA No. 1906/PUN/2024, assessment year 2020-21, ITAT Pune (R.K. Panda, Vice President, and Pavan Kumar Gadale, Judicial Member), pronounced 17 July 2026, decides it, and it cuts against the Revenue. The TPO there sought to re-benchmark the export manufacturing and distribution segment for assessment year 2020-21 by applying the 6.18 per cent margin agreed in a bilateral APA signed with the Board on 3 August 2018 covering financial years 2013-14 to 2017-18, raising the proposed adjustment from Rs 2,26,03,992 to Rs 3,22,91,417. At para 75 the Bench records the assessee's reliance on s.92CC(4) read with sub-section (9A) and says it finds some force in the argument; at para 78 it holds in its own voice that the TPO's approach is inappropriate and against the provisions of the Act and restores the issue to the Assessing Officer and the TPO; at para 79 the appeal is partly allowed. That order has its own entry in this library. Two further corrections to the earlier version of this note. The passage about the specified time span not exceeding five consecutive previous years, which appears in Concentrix Daksh Services India and A.T. Kearney and also in DLF Urban Pvt Ltd (ITAT Delhi, 8 April 2024) and Jindal Pipes Ltd (ITAT Delhi, 19 September 2024), is not merely a Departmental Representative's submission: it is the Pune Bench's own holding in DCIT v. AGS Customer Services India Pvt Ltd, ITA No. 162/Pun/2022, which Tetra Pak reproduces at para 76, and in which the Bench reversed the Commissioner (Appeals)'s findings as going against s.92CC(4) read with sub-section (9A) and remitted the appeal. And the name of that case is AGS, not ACS as this note earlier recorded; the AGS order is still not separately reachable on indiankanoon, but Tetra Pak reproduces it. A near miss remains worth recording: in HSBC Electronic Data Processing India P Ltd v ACIT (ITA No. 2388/Hyd/2018, pronounced 17 July 2019) the assessee argued for assessment year 2014-15 that the margin agreed in an APA covering 2015-16 to 2019-20 should be applied to the year immediately before it, and the Departmental Representative answered that the year was not within the APA period, but the Tribunal disposed of the appeal on comparability and never ruled on the APA point. 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 statutory position is that the agreement operates within a defined window and not outside it. The maximum forward term is five consecutive previous years, specified in the agreement itself; the maximum backward extension is four previous years preceding the first of those, and only where the agreement so provides on the prescribed conditions. Sections 92CC(3) and (5) tie the displacement of s.92C and s.92CA, and the binding force on the Commissioner and his subordinates, to the transaction in respect of which the agreement was entered into. For a previous year outside that window the ordinary transfer pricing machinery applies and the agreed price is not binding on either side - a limit the Pune Bench has enforced against the Revenue in Tetra Pak India, holding that the TPO's approach of comparing the margin agreed in an APA covering assessment years 2014-15 to 2018-19 with the actual margin of assessment year 2020-21, which is not a covered year of that APA, is inappropriate and against the provisions of the Act, and restoring the issue to the Assessing Officer and the TPO for fresh adjudication (paras 78 and 79).
TaxSphere, “s.92CC(4) — the five-year APA term and the year outside it”, https://taxnotice.vittsphere.com/caselaw/case/statutory-position-92cc-4-the-five-year-apa-term-the-four-rollback-years-and-the-year-outside/ (validity last checked 2026-09-16)
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