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?
Rule 10Q allows the Board to revise a concluded agreement on three grounds — a change in critical assumptions or failure to meet a condition, a change in law that modifies a matter covered by the agreement without making it non-binding, and a request from the competent authority of the other country in a bilateral or multilateral case. Except where the assessee himself asked for the revision, the agreement cannot be revised unless he has been heard and is in agreement with the proposed revision; if he is not, Rule 10Q(4) sends the matter to cancellation under Rule 10R. Rule 10R lists four cancellation grounds, requires an opportunity of being heard, and requires a written order giving reasons and specifying the date from which the cancellation takes effect.
Decided by the CBDT Circulars & Instructions (Not applicable — statutory text) on 2012-07-01, reported as Rules 10F to 10T made under s.92CC(9) of the Income-tax Act 1961, which took effect on 1 July 2012. It bears on section Rule 10Q, section Rule 10R, section Rule 10P, section Rule 10-O, section Rule 10L, section Rule 10RA, section 92CC, section 92CC(6), section 92CC(7), section 92CC(9) of the Income Tax Act 1961, in Assessment & Scrutiny and How Tax Law Is Read matters.
A cancellation destroys the certainty the assessee paid a fee and spent years to obtain, and under Rule 10R it can follow from something as ordinary as a late annual compliance report. The leverage is procedural — the hearing, the reasons, and the effective date — and it has to be used before the order issues, because no decided case on either rule could be found and there is no judicial gloss to fall back on.
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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Rule 10Q(1) provides that an agreement, subsequent to it having been entered into, may be revised by the Board if (a) there is a change in critical assumptions or failure to meet a condition subject to which the agreement has been entered into; (b) there is a change in law that modifies any matter covered by the agreement but is not of the nature which renders the agreement to be non-binding; or (c) there is a request from competent authority in the other country requesting revision of agreement, in case of bilateral or multilateral agreement. Sub-rule (2) allows revision suo motu or on the request of the assessee, the competent authority in India or the Director General of Income-tax (International Taxation). Sub-rule (3) bars revision, except where the assessee asked for it, unless an opportunity of being heard has been provided and the assessee is in agreement with the proposed revision; sub-rule (4) provides that where he is not in agreement the agreement may be cancelled in accordance with Rule 10R; sub-rule (5) requires a written rejection with reasons where the Board will not accept the assessee's request; sub-rule (6) applies the Rule 10L procedure so far as it applies; and sub-rule (7) requires the revised agreement to state the date till which the original agreement applies and the date from which the revised agreement applies. Rule 10R(1) provides that an agreement shall be cancelled by the Board for any of the following reasons: (i) the compliance audit referred to in rule 10P has resulted in the finding of failure on the part of the assessee to comply with the terms of the agreement; (ii) the assessee has failed to file the annual compliance report in time; (iii) the annual compliance report furnished by the assessee contains material errors; or (iv) the agreement is to be cancelled under sub-rule (4) of rule 10Q or sub-rule (7) of rule 10RA. Sub-rule (2) requires an opportunity of being heard before cancellation; sub-rule (3) requires the competent authority in India to communicate with the competent authorities in the other countries and give reasons for the proposed cancellation in a bilateral or multilateral case; sub-rule (4) requires the cancellation order to be in writing and to give reasons for cancellation and for non-acceptance of the assessee's submission, if any; sub-rule (5) requires the order to specify the effective date of cancellation where applicable; sub-rule (6) deals with an order declaring an agreement void ab initio under s.92CC(7); and sub-rule (7) requires the order to be communicated to the Assessing Officer and the Transfer Pricing Officer having jurisdiction over the assessee.
The statutory position is that revision under Rule 10Q is consensual in all but name: unless the assessee asked for it, the Board cannot revise without hearing him and without his agreement, and his refusal converts the exercise into a cancellation under Rule 10R. Cancellation is confined to the four grounds in Rule 10R(1), three of which are compliance failures rather than pricing disputes. Both rules carry an express hearing requirement and an express reasons requirement, and Rule 10R(5) requires the order to fix the date from which the cancellation operates.
The scheme separates three different things and gives each its own machinery. A change in law or facts having a bearing on the agreement takes the agreement out of the binding category altogether under s.92CC(6). A change short of that, in critical assumptions or in a condition, is dealt with by revision under Rule 10Q, prospectively and by consent. A failure by the assessee to do what the agreement and the rules require of him — comply with its terms as found on the Rule 10P compliance audit, file the Rule 10-O annual compliance report in time, or file one free of material error — is dealt with by cancellation under Rule 10R, again prospectively and with an effective date to be fixed. Only s.92CC(7) reaches back to the beginning, and only for fraud or misrepresentation. That is why Rule 10R(6) deals with the void ab initio order in a separate sub-rule from the cancellation order in sub-rule (4): they are different orders with different consequences.
The Board shall give an opportunity of being heard to the assessee, before proceeding to cancel an application.
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Handle my notice → Ask a CA on WhatsAppRule 10Q allows the Board to revise a concluded agreement on three grounds — a change in critical assumptions or failure to meet a condition, a change in law that modifies a matter covered by the agreement without making it non-binding, and a request from the competent authority of the other country in a bilateral or multilateral case. Except where the assessee himself asked for the revision, the agreement cannot be revised unless he has been heard and is in agreement with the proposed revision; if he is not, Rule 10Q(4) sends the matter to cancellation under Rule 10R. Rule 10R lists four cancellation grounds, requires an opportunity of being heard, and requires a written order giving reasons and specifying the date from which the cancellation takes effect. This was decided by the CBDT Circulars & Instructions (Not applicable — statutory text) and bears on section Rule 10Q, section Rule 10R, section Rule 10P, section Rule 10-O, section Rule 10L, section Rule 10RA, section 92CC, section 92CC(6), section 92CC(7), section 92CC(9) of the Income Tax Act 1961. It is reported as Rules 10F to 10T made under s.92CC(9) of the Income-tax Act 1961, which took effect on 1 July 2012. A cancellation destroys the certainty the assessee paid a fee and spent years to obtain, and under Rule 10R it can follow from something as ordinary as a late annual compliance report. The leverage is procedural — the hearing, the reasons, and the effective date — and it has to be used before the order issues, because no decided case on either rule could be found and there is no judicial gloss to fall back on. If it applies to you, the first step is this: Identify which rule you are actually in. A proposal to change the agreement going forward is Rule 10Q; a proposal to end it is Rule 10R; a proposal to unwind it from the beginning is s.92CC(7) and needs fraud or misrepresentation.
Rule 10Q(1) provides that an agreement, subsequent to it having been entered into, may be revised by the Board if (a) there is a change in critical assumptions or failure to meet a condition subject to which the agreement has been entered into; (b) there is a change in law that modifies any matter covered by the agreement but is not of the nature which renders the agreement to be non-binding; or (c) there is a request from competent authority in the other country requesting revision of agreement, in case of bilateral or multilateral agreement. Sub-rule (2) allows revision suo motu or on the request of the assessee, the competent authority in India or the Director General of Income-tax (International Taxation). Sub-rule (3) bars revision, except where the assessee asked for it, unless an opportunity of being heard has been provided and the assessee is in agreement with the proposed revision; sub-rule (4) provides that where he is not in agreement the agreement may be cancelled in accordance with Rule 10R; sub-rule (5) requires a written rejection with reasons where the Board will not accept the assessee's request; sub-rule (6) applies the Rule 10L procedure so far as it applies; and sub-rule (7) requires the revised agreement to state the date till which the original agreement applies and the date from which the revised agreement applies. Rule 10R(1) provides that an agreement shall be cancelled by the Board for any of the following reasons: (i) the compliance audit referred to in rule 10P has resulted in the finding of failure on the part of the assessee to comply with the terms of the agreement; (ii) the assessee has failed to file the annual compliance report in time; (iii) the annual compliance report furnished by the assessee contains material errors; or (iv) the agreement is to be cancelled under sub-rule (4) of rule 10Q or sub-rule (7) of rule 10RA. Sub-rule (2) requires an opportunity of being heard before cancellation; sub-rule (3) requires the competent authority in India to communicate with the competent authorities in the other countries and give reasons for the proposed cancellation in a bilateral or multilateral case; sub-rule (4) requires the cancellation order to be in writing and to give reasons for cancellation and for non-acceptance of the assessee's submission, if any; sub-rule (5) requires the order to specify the effective date of cancellation where applicable; sub-rule (6) deals with an order declaring an agreement void ab initio under s.92CC(7); and sub-rule (7) requires the order to be communicated to the Assessing Officer and the Transfer Pricing Officer having jurisdiction over the assessee. 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 revision under Rule 10Q is consensual in all but name: unless the assessee asked for it, the Board cannot revise without hearing him and without his agreement, and his refusal converts the exercise into a cancellation under Rule 10R. Cancellation is confined to the four grounds in Rule 10R(1), three of which are compliance failures rather than pricing disputes. Both rules carry an express hearing requirement and an express reasons requirement, and Rule 10R(5) requires the order to fix the date from which the cancellation operates.
The scheme separates three different things and gives each its own machinery. A change in law or facts having a bearing on the agreement takes the agreement out of the binding category altogether under s.92CC(6). A change short of that, in critical assumptions or in a condition, is dealt with by revision under Rule 10Q, prospectively and by consent. A failure by the assessee to do what the agreement and the rules require of him — comply with its terms as found on the Rule 10P compliance audit, file the Rule 10-O annual compliance report in time, or file one free of material error — is dealt with by cancellation under Rule 10R, again prospectively and with an effective date to be fixed. Only s.92CC(7) reaches back to the beginning, and only for fraud or misrepresentation. That is why Rule 10R(6) deals with the void ab initio order in a separate sub-rule from the cancellation order in sub-rule (4): they are different orders with different consequences. In the words reproduced by the source cited on this page: "The Board shall give an opportunity of being heard to the assessee, before proceeding to cancel an application."
It was decided by the CBDT Circulars & Instructions on 2012-07-01 and is reported as Rules 10F to 10T made under s.92CC(9) of the Income-tax Act 1961, which took effect on 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 Rule 10Q, section Rule 10R, section Rule 10P, section Rule 10-O, section Rule 10L, section Rule 10RA, section 92CC, section 92CC(6), section 92CC(7), section 92CC(9), 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 revision under Rule 10Q is consensual in all but name: unless the assessee asked for it, the Board cannot revise without hearing him and without his agreement, and his refusal converts the exercise into a cancellation under Rule 10R. Cancellation is confined to the four grounds in Rule 10R(1), three of which are compliance failures rather than pricing disputes. Both rules carry an express hearing requirement and an express reasons requirement, and Rule 10R(5) requires the order to fix the date from which the cancellation operates. It arises in Assessment & Scrutiny and How Tax Law Is Read matters, on section Rule 10Q, section Rule 10R, section Rule 10P, section Rule 10-O, section Rule 10L, section Rule 10RA, section 92CC, section 92CC(6), section 92CC(7), section 92CC(9) 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. If it is Rule 10Q, note that outside a revision you yourself requested, the Board cannot revise unless you have been heard and you agree — Rule 10Q(3). Withholding agreement is a real option, but Rule 10Q(4) makes cancellation the consequence, so weigh the two. If it is Rule 10R, test the ground against the four in Rule 10R(1): an adverse finding in the Rule 10P compliance audit, a late annual compliance report, material errors in that report, or cancellation flowing from Rule 10Q(4) or Rule 10RA(7). Nothing else supports a cancellation. Ask for the Rule 10R(2) hearing in writing, and then for an order under Rule 10R(4) that gives reasons both for the cancellation and for not accepting what you said. Fight over the effective date under Rule 10R(5). A cancellation running from a date in the past is far more damaging than one running from the year in which the default occurred. In a bilateral or multilateral case, remember Rule 10R(3): the competent authority in India must communicate the proposed cancellation, and the reasons for it, to the competent authorities in the other countries.
Still good law. Rules 10Q and 10R as set out here are the text the Income-tax Department currently publishes on its rule pages, each stamped 13 December 2025. The only amendment footnote on Rule 10R is to clause (iv) of sub-rule (1), recording insertion by the Income-tax (Third Amendment) Rules 2015 with effect from 14 March 2015 — the amendment that brought in the rollback machinery in rules 10MA and 10RA. Rule 10Q carries no amendment footnote. The department's footnote to s.92CC confirms that rules 10F to 10T, rule 44GA and Forms 3CEC to 3CEF remain the prescribed advance pricing agreement scheme. Nothing was found showing either rule omitted or substituted. 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.
Rule 10R(2), as the department prints it, says the Board shall give an opportunity of being heard before proceeding to cancel "an application". The rule is about cancelling an agreement, not an application; the word is a slip that has survived in the published text, and it was checked twice on the department's page. Read it as referring to the agreement. No decided case applying Rule 10Q or Rule 10R could be found. indiankanoon was searched on 16 September 2026 for "rule 10R" with "advance pricing agreement" and cancellation; for "rule 10Q" or "revision of an agreement" with "advance pricing", which returned nothing at all; and for "cancellation of the agreement" with "advance pricing agreement" and Board. The only decision returned on any of those was the Telangana High Court in Deloitte Consulting India, which this library already holds and which turns on Rule 10-O and Rule 10P, not on revision or cancellation. An earlier round of searching in a separate pass produced the same result. Rule 10RA(7), referred to in Rule 10R(1)(iv), was not set out here. 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 revision under Rule 10Q is consensual in all but name: unless the assessee asked for it, the Board cannot revise without hearing him and without his agreement, and his refusal converts the exercise into a cancellation under Rule 10R. Cancellation is confined to the four grounds in Rule 10R(1), three of which are compliance failures rather than pricing disputes. Both rules carry an express hearing requirement and an express reasons requirement, and Rule 10R(5) requires the order to fix the date from which the cancellation operates.
TaxSphere, “Rule 10Q and Rule 10R — revision and cancellation of an APA”, https://taxnotice.vittsphere.com/caselaw/case/statutory-position-rule-10q-and-rule-10r-revising-or-cancelling-an-advance-pricing-agreement/ (validity last checked 2026-09-16)
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