The TPO's order says I must now make a secondary adjustment. Which primary adjustments actually trigger s.92CE, and is there any threshold or year below which the section simply does not apply to me?
Section 92CE(1) is triggered by a primary adjustment to transfer price arising in any one of FIVE ways — made suo motu by the assessee in his return; made by the Assessing Officer and accepted by the assessee; determined by an advance pricing agreement entered into under s.92CC on or after 1 April 2017; made under the safe harbour rules framed under s.92CB; or arising from a resolution under the mutual agreement procedure under an agreement entered into under s.90 or s.90A. In any of those cases "the assessee shall make a secondary adjustment". The first proviso then takes the case out of the section altogether if EITHER (i) the amount of primary adjustment made in any previous year does not exceed one crore rupees, OR (ii) the primary adjustment is made in respect of an assessment year commencing on or before 1 April 2016. The word joining those two limbs was originally "and"; it was substituted by "or" by Act No. 23 of 2019 with retrospective effect from 1 April 2018, and that single word is what makes the exclusions workable.
Decided by the CBDT Circulars & Instructions (Not applicable — statutory text) on 2018-04-01, reported as Section 92CE(1) of the Income-tax Act, 1961; sub-section (1) with both provisos reproduced by the ITAT Mumbai in Tech Mahindra Ltd v DCIT, ITA 7487/MUM/2012, order dated 24 August 2026. It bears on section 92CE, section 92CE(1), section 92CE(2), section 92CE(3), section 92CC, section 92CB, section 92A, section 92F, section 90, section 90A, section Rule 10CB of the Income Tax Act 1961, in Assessment & Scrutiny and How Tax Law Is Read matters.
Three practical consequences. First, the gateway list is closed. An adjustment that the assessee has NOT accepted — one that is under appeal, or one made by the Assessing Officer and contested — is not within clause (ii), which requires acceptance. Nor is an adjustment arising from a High Court or Supreme Court order. If the officer is demanding repatriation on the back of a disputed adjustment, ask him which of the five clauses he says applies. Second, the proviso now reads disjunctively, so a taxpayer whose primary adjustment for any previous year is one crore rupees or less is out of the section entirely, whatever the assessment year; and a taxpayer whose primary adjustment relates to AY 2016-17 or an earlier year is out of it whatever the amount. Under the section as originally enacted in 2017 both conditions had to be met, which meant almost nobody escaped; the 2019 substitution of "or" for "and" was made retrospective to 1 April 2018 precisely to cure that. Third, the second proviso closes the door on the windfall: "no refund of taxes paid, if any, by virtue of provisions of this sub-section as they stood immediately before their amendment by the Finance (No. 2) Act, 2019 shall be claimed and allowed". A taxpayer who paid on the pre-amendment reading cannot get the money back; he can only stop paying going forward.
Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them.
Read aloud by your device. Press again to stop.
Section 92CE(1), as printed on the departmental page stamped Year 2019 (No. 2), reads: "92CE. (1) Where a primary adjustment to transfer price,— (i) has been made suo motu by the assessee in his return of income; (ii) made by the Assessing Officer has been accepted by the assessee; (iii) is determined by an advance pricing agreement entered into by the assessee under section 92CC, on or after the 1st day of April, 2017; (iv) is made as per the safe harbour rules framed under section 92CB; or (v) is arising as a result of resolution of an assessment by way of the mutual agreement procedure under an agreement entered into under section 90 or section 90A for avoidance of double taxation, the assessee shall make a secondary adjustment: Provided that nothing contained in this section shall apply, if,— (i) the amount of primary adjustment made in any previous year does not exceed one crore rupees; or (ii) the primary adjustment is made in respect of an assessment year commencing on or before the 1st day of April, 2016: Provided further that no refund of taxes paid, if any, by virtue of provisions of this sub-section as they stood immediately before their amendment by the Finance (No. 2) Act, 2019 shall be claimed and allowed." Sub-section (3) defines the terms the section runs on: "associated enterprise" has the meaning in s.92A(1) and (2); "arm's length price" the meaning in s.92F(ii); "excess money" means "the difference between the arm's length price determined in primary adjustment and the price at which the international transaction has actually been undertaken"; "primary adjustment" to a transfer price means "the determination of transfer price in accordance with the arm's length principle resulting in an increase in the total income or reduction in the loss, as the case may be, of the assessee"; and "secondary adjustment" means "an adjustment in the books of account of the assessee and its associated enterprise to reflect that the actual allocation of profits between the assessee and its associated enterprise are consistent with the transfer price determined as a result of primary adjustment, thereby removing the imbalance between cash account and actual profit of the assessee".
Not a judgment. The statutory position is that a secondary adjustment is compulsory ("the assessee shall make a secondary adjustment") where a primary adjustment to transfer price arises in any of the five ways listed in s.92CE(1)(i) to (v); that by the first proviso the section does not apply at all where either the primary adjustment in the previous year does not exceed one crore rupees or the primary adjustment is made in respect of an assessment year commencing on or before 1 April 2016, those two limbs being alternatives since Act No. 23 of 2019 substituted "or" for "and" with retrospective effect from 1 April 2018; and that by the second proviso no refund may be claimed or allowed of tax paid under the sub-section as it stood before that amendment.
Not a judgment; no judicial reasoning is offered for the section itself. On the operation of the first proviso the ITAT Mumbai recorded at paragraph 11.3 of its order of 24 August 2026 in Tech Mahindra Ltd v DCIT that "A.Y. 2008-09 is an assessment year commencing prior to 01/04/2016" and that "Consequently, in view of proviso (ii) to section 92CE(1) of the Act, the provisions relating to secondary adjustment were not applicable to the transaction under consideration."
Provided that nothing contained in this section shall apply, if,— (i) the amount of primary adjustment made in any previous year does not exceed one crore rupees; or (ii) the primary adjustment is made in respect of an assessment year commencing on or before the 1st day of April, 2016:
Upload it and we will read it, work out your deadline and draft the reply. A CA reviews before anything is filed.
Handle my notice → Ask a CA on WhatsAppSection 92CE(1) is triggered by a primary adjustment to transfer price arising in any one of FIVE ways — made suo motu by the assessee in his return; made by the Assessing Officer and accepted by the assessee; determined by an advance pricing agreement entered into under s.92CC on or after 1 April 2017; made under the safe harbour rules framed under s.92CB; or arising from a resolution under the mutual agreement procedure under an agreement entered into under s.90 or s.90A. In any of those cases "the assessee shall make a secondary adjustment". The first proviso then takes the case out of the section altogether if EITHER (i) the amount of primary adjustment made in any previous year does not exceed one crore rupees, OR (ii) the primary adjustment is made in respect of an assessment year commencing on or before 1 April 2016. The word joining those two limbs was originally "and"; it was substituted by "or" by Act No. 23 of 2019 with retrospective effect from 1 April 2018, and that single word is what makes the exclusions workable. This was decided by the CBDT Circulars & Instructions (Not applicable — statutory text) and bears on section 92CE, section 92CE(1), section 92CE(2), section 92CE(3), section 92CC, section 92CB, section 92A, section 92F, section 90, section 90A, section Rule 10CB of the Income Tax Act 1961. It is reported as Section 92CE(1) of the Income-tax Act, 1961; sub-section (1) with both provisos reproduced by the ITAT Mumbai in Tech Mahindra Ltd v DCIT, ITA 7487/MUM/2012, order dated 24 August 2026. Three practical consequences. First, the gateway list is closed. An adjustment that the assessee has NOT accepted — one that is under appeal, or one made by the Assessing Officer and contested — is not within clause (ii), which requires acceptance. Nor is an adjustment arising from a High Court or Supreme Court order. If the officer is demanding repatriation on the back of a disputed adjustment, ask him which of the five clauses he says applies. Second, the proviso now reads disjunctively, so a taxpayer whose primary adjustment for any previous year is one crore rupees or less is out of the section entirely, whatever the assessment year; and a taxpayer whose primary adjustment relates to AY 2016-17 or an earlier year is out of it whatever the amount. Under the section as originally enacted in 2017 both conditions had to be met, which meant almost nobody escaped; the 2019 substitution of "or" for "and" was made retrospective to 1 April 2018 precisely to cure that. Third, the second proviso closes the door on the windfall: "no refund of taxes paid, if any, by virtue of provisions of this sub-section as they stood immediately before their amendment by the Finance (No. 2) Act, 2019 shall be claimed and allowed". A taxpayer who paid on the pre-amendment reading cannot get the money back; he can only stop paying going forward. If it applies to you, the first step is this: Before doing anything else, put the primary adjustment against the two limbs of the first proviso. One crore rupees or less in the previous year, OR an assessment year commencing on or before 1 April 2016 — either one and s.92CE does not apply at all, and no repatriation, no deemed advance and no imputed interest arise.
Section 92CE(1), as printed on the departmental page stamped Year 2019 (No. 2), reads: "92CE. (1) Where a primary adjustment to transfer price,— (i) has been made suo motu by the assessee in his return of income; (ii) made by the Assessing Officer has been accepted by the assessee; (iii) is determined by an advance pricing agreement entered into by the assessee under section 92CC, on or after the 1st day of April, 2017; (iv) is made as per the safe harbour rules framed under section 92CB; or (v) is arising as a result of resolution of an assessment by way of the mutual agreement procedure under an agreement entered into under section 90 or section 90A for avoidance of double taxation, the assessee shall make a secondary adjustment: Provided that nothing contained in this section shall apply, if,— (i) the amount of primary adjustment made in any previous year does not exceed one crore rupees; or (ii) the primary adjustment is made in respect of an assessment year commencing on or before the 1st day of April, 2016: Provided further that no refund of taxes paid, if any, by virtue of provisions of this sub-section as they stood immediately before their amendment by the Finance (No. 2) Act, 2019 shall be claimed and allowed." Sub-section (3) defines the terms the section runs on: "associated enterprise" has the meaning in s.92A(1) and (2); "arm's length price" the meaning in s.92F(ii); "excess money" means "the difference between the arm's length price determined in primary adjustment and the price at which the international transaction has actually been undertaken"; "primary adjustment" to a transfer price means "the determination of transfer price in accordance with the arm's length principle resulting in an increase in the total income or reduction in the loss, as the case may be, of the assessee"; and "secondary adjustment" means "an adjustment in the books of account of the assessee and its associated enterprise to reflect that the actual allocation of profits between the assessee and its associated enterprise are consistent with the transfer price determined as a result of primary adjustment, thereby removing the imbalance between cash account and actual profit of the assessee". The matter was decided on 2018-04-01 by the CBDT Circulars & Instructions (Not applicable — statutory text). On those facts the CBDT Circulars & Instructions held as follows. Not a judgment. The statutory position is that a secondary adjustment is compulsory ("the assessee shall make a secondary adjustment") where a primary adjustment to transfer price arises in any of the five ways listed in s.92CE(1)(i) to (v); that by the first proviso the section does not apply at all where either the primary adjustment in the previous year does not exceed one crore rupees or the primary adjustment is made in respect of an assessment year commencing on or before 1 April 2016, those two limbs being alternatives since Act No. 23 of 2019 substituted "or" for "and" with retrospective effect from 1 April 2018; and that by the second proviso no refund may be claimed or allowed of tax paid under the sub-section as it stood before that amendment.
Not a judgment; no judicial reasoning is offered for the section itself. On the operation of the first proviso the ITAT Mumbai recorded at paragraph 11.3 of its order of 24 August 2026 in Tech Mahindra Ltd v DCIT that "A.Y. 2008-09 is an assessment year commencing prior to 01/04/2016" and that "Consequently, in view of proviso (ii) to section 92CE(1) of the Act, the provisions relating to secondary adjustment were not applicable to the transaction under consideration." In the words reproduced by the source cited on this page: "Provided that nothing contained in this section shall apply, if,— (i) the amount of primary adjustment made in any previous year does not exceed one crore rupees; or (ii) the primary adjustment is made in respect of an assessment year commencing on or before the 1st day of April, 2016:"
It was decided by the CBDT Circulars & Instructions on 2018-04-01 and is reported as Section 92CE(1) of the Income-tax Act, 1961; sub-section (1) with both provisos reproduced by the ITAT Mumbai in Tech Mahindra Ltd v DCIT, ITA 7487/MUM/2012, order dated 24 August 2026. 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 92CE, section 92CE(1), section 92CE(2), section 92CE(3), section 92CC, section 92CB, section 92A, section 92F, section 90, section 90A, section Rule 10CB, 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. Not a judgment. The statutory position is that a secondary adjustment is compulsory ("the assessee shall make a secondary adjustment") where a primary adjustment to transfer price arises in any of the five ways listed in s.92CE(1)(i) to (v); that by the first proviso the section does not apply at all where either the primary adjustment in the previous year does not exceed one crore rupees or the primary adjustment is made in respect of an assessment year commencing on or before 1 April 2016, those two limbs being alternatives since Act No. 23 of 2019 substituted "or" for "and" with retrospective effect from 1 April 2018; and that by the second proviso no refund may be claimed or allowed of tax paid under the sub-section as it stood before that amendment. It arises in Assessment & Scrutiny and How Tax Law Is Read matters, on section 92CE, section 92CE(1), section 92CE(2), section 92CE(3), section 92CC, section 92CB, section 92A, section 92F, section 90, section 90A, section Rule 10CB 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. Make the officer identify which of clauses (i) to (v) of s.92CE(1) he relies on. If the adjustment is contested and has not been accepted by you, clause (ii) is not satisfied on its own terms. Check the date of your APA. Clause (iii) reaches only an agreement entered into under s.92CC ON OR AFTER 1 April 2017; an earlier APA does not bring you within the section. If you have already paid additional tax or imputed interest on the pre-2019 cumulative reading of the proviso, do not budget for a refund — the second proviso bars the claim expressly. Confine the relief you seek to years still open. Read s.92CE(3)(iii) before computing anything: "excess money" is the difference between the arm's length price determined in the primary adjustment and the price at which the international transaction was actually undertaken — not the tax on it.
Still good law. The text is current so far as could be established: two published editions of different vintages print sub-section (1) identically, and the whole of sub-section (1) with both provisos is reproduced in the same words by the ITAT Mumbai in an order of 24 August 2026. No later edition was looked for, so a still later version cannot be excluded on this evidence. No constitutional or vires challenge to the section has been checked for. Three qualifications follow. The commencement of the section itself could not be sourced from any published footnote, so the date this entry works from is a derivation and not a certified commencement; anyone whose case turns on a year at the boundary should establish it from the Finance Act, 2017 itself. The 2019 amendments are retrospective to 1 April 2018, which means that a proceeding for an intervening year may have been decided on words that have since been replaced. The point to check in any older order is whether the proviso was read with "and" or with "or", because that changes which taxpayers were inside the section at all. And the section is only half of the machinery. Rule 10CB, which prescribes the time within which the excess money is to be repatriated and the rate at which interest is imputed on it, has not been set out here, and a computation made from the section alone will be incomplete. The interaction with an agreement under s.92CC, and with a safe harbour under s.92CB, is likewise outside this entry. 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 text is taken from a published edition of the Income-tax Act, 1961 printing the heading "Secondary adjustment in certain cases", and confirmed against a second edition which prints the same words. The original text of the section is still in circulation and must not be used to state the current position: its clause (iii) carries no "on or after the 1st day of April, 2017", its proviso joins the two limbs with "and", and it has no second proviso and no sub-sections (2A) to (2D). The footnotes, transcribed verbatim, read "15. Ins. by the Act. No. 23 of 2019, w.r.e.f. 1-4-2018.", "16. Sub. for \"and\" by the Act. No. 23 of 2019, w.r.e.f. 1-4-2018.", "17. Ins. by the Act. No. 23 of 2019, w.r.e.f. 1-4-2018.", "18. See rule 10CB.", "19. Ins. by the Act. No. 23 of 2019, w.r.e.f. 1-4-2018." and "20. Ins. by the Act. No. 23 of 2019, w.e.f. 1-9-2019." Act No. 23 of 2019 is the Finance (No. 2) Act, 2019. There are five gateways into s.92CE, clauses (i) to (v), and they are set out here as the section prints them; an account that gives four is incomplete. The 'decided_on' value 2018-04-01 is the date from which the section operates. The published texts carry no footnote dating the insertion of s.92CE itself, and 1 April 2018 is taken from two things: the ITAT Mumbai's statement, quoting its own coordinate bench order of 25 October 2023, that "Section 92CE was introduced by the Finance Act 2017, w.e.f.01.04.2018", and the footnotes above, which make the 2019 amendments retrospective "w.r.e.f. 1-4-2018" and so presuppose that date as the section's commencement. That derivation is disclosed rather than certified. Two points of substance. The substitution of "or" for "and" in the proviso is the amendment that does the most work, because it turns two cumulative conditions into alternatives, and it is retrospective to 1 April 2018; an assessment for an intervening year decided on the older reading is open to correction. And the one crore threshold and the repatriation period are not in the section alone: the period within which the excess money must be repatriated is prescribed by rule 10CB, which has to be read with the section and which the footnote itself points to. A secondary adjustment worked without that rule will have the right principal and the wrong interest. 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.
Not a judgment. The statutory position is that a secondary adjustment is compulsory ("the assessee shall make a secondary adjustment") where a primary adjustment to transfer price arises in any of the five ways listed in s.92CE(1)(i) to (v); that by the first proviso the section does not apply at all where either the primary adjustment in the previous year does not exceed one crore rupees or the primary adjustment is made in respect of an assessment year commencing on or before 1 April 2016, those two limbs being alternatives since Act No. 23 of 2019 substituted "or" for "and" with retrospective effect from 1 April 2018; and that by the second proviso no refund may be claimed or allowed of tax paid under the sub-section as it stood before that amendment.
TaxSphere, “Statutory position — s.92CE(1): the FIVE gateways into a secondary adjustment, the one crore threshold, the AY 2016-17 cut-off, and the word "and" that was retrospectively replaced by "or"”, https://taxnotice.vittsphere.com/caselaw/case/statutory-position-92ce-1-the-five-gateways-the-one-crore-threshold-and-the-and-that-became-or/ (validity last checked 2026-09-09)
The judgment itself is a government work and may be quoted freely. The summary, the validity note and the reasoning on this page are this library's own writing: quote them with attribution, and please do not present either as the words of the court — this page keeps the two apart and so should a quotation of it.
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
My primary adjustment stands and the money is still with my overseas associated enterprise. When exactly do my ninety days start, and at what rate is the deemed advance to be charged interest?
The TPO has re-characterised a payment to my associated enterprise as an interest-free loan and imputed notional interest on it, calling it a consequential adjustment. My year is well before 2016 and the underlying adjustment was itself deleted. Can he do that?
My associated enterprise will not send the money back. Can I simply pay tax on it and be done, and if I do, what do I give up?
The TPO is charging notional interest on my overdue receivables from my associated enterprise. Can I argue for a 90-day credit period by analogy to the secondary adjustment repatriation window in s.92CE and Rule 10CB?
