Amendment of the Income-tax Rules under section 295 of the Income-tax Act, 1961
Notification No. 31 was published on 6 February 2003. Its subject is Amendment of the Income-tax Rules under section 295 of the Income-tax Act, 1961.
This amends the Income-tax Rules. What it changes is the Rules, not the Act — and a rule can never take away what the section gives.
By the Income-tax (Amendment) Rules, 2003, made under clause (h) of sub-section (2) of section 295 of the Income-tax Act, 1961, the Central Board of Direct Taxes inserts a new Part IX-C, "Mutual Agreement Procedure", in the Income-tax Rules, 1962 after Part IXB, comprising rules 44G and 44H, and inserts Form No. 34F in the Appendix after Form No. 34E. Rule 44G allows a resident assessee aggrieved by any action of the tax authorities of a country outside India, on the ground that the action is not in accordance with the terms of the agreement with that country, to apply in Form No. 34F to the Competent Authority in India to invoke the mutual agreement procedure provided in the agreement. Rule 44H requires the Competent Authority in India, on a reference from the competent authority of the other country about action taken by an income-tax authority in India, to call for and examine the relevant records and respond, and to endeavour to resolve the case in accordance with the agreement. The resolution arrived at is to be communicated in writing, where necessary, to the Chief Commissioner or Director-General of Income-tax, and the Assessing Officer must give effect to it within ninety days of its receipt by the Chief Commissioner or Director-General, provided the assessee accepts the resolution and withdraws any appeal pending on the issue that was the subject-matter of the procedure. Tax, interest or penalty already determined is to be adjusted after incorporating the decision, in the manner provided by the Act or the rules to the extent not contrary to the resolution. The Explanation defines "Competent Authority of India" as an officer authorised by the Central Government to discharge those functions.
| Under the 1961 Act | Now |
|---|---|
| s.295 | s.533 |
Notification No : 31
Section(s) Referred :
Date of Issue : 6/2/2003
Notification No. 31 of 2003 dt. 6th February 2003.
In exercise of the powers conferred by clause (h) of sub-section (2) of section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:--
1. (1) These rules may be called the Income-tax (Amendment) Rules, 2003.
(2) They shall come into force on the date of their publication in the Official Gazette.
2. (a) In the Income-tax Rules, 1962, after Part IXB, the following Part shall be inserted, namely:--
'PART IX-C
MUTUAL AGREEMENT PROCEDURE
44G. Application for giving effect to the terms of any agreement under clause (h) of sub-section (2) of section 295.--Where a resident assessee is aggrieved by any action of the tax authorities of any country outside India for the reason that, according to him, such action is not in accordance with the terms of agreement with such other country outside India, he may make an application to the Competent Authority in India seeking to invoke the mutual agreement procedure, if any, provided therein, in terms of Form No. 34F.
44H. Action by the Competent Authority of India and procedure for giving effect to the decision under the agreement.--(1) Where a reference has been received from the competent authority of a country outside India under any agreement with that country with regard to any action taken by any income-tax authority in India, the Competent Authority in India shall call for and examine the relevant records with a view to give his response to the competent authority of the country outside India.
(2) The Competent Authority in India shall endeavour to arrive at a resolution of the case in accordance with such agreement.
(3) The resolution arrived at under mutual agreement procedure, in consultation with the competent authority of the country outside India, shall be communicated, wherever necessary, to the Chief Commissioner or the Director-General of Income-tax, as the case may be, in writing.
(4) The effect to the resolution arrived at under mutual agreement procedure shall be given by the Assessing Officer within ninety days of receipt of the same by the Chief Commissioner or the Director General of Income-tax, if the assessee,
(i) gives his acceptance to the resolution taken under mutual agreement procedure; and
(ii) withdraws his appeal, if any, pending on the issue which was the subject-matter for adjudication under mutual agreement procedure.
(5) The amount of tax, interest or penalty already determined shall be adjusted after incorporating the decision taken under mutual agreement procedure in the manner provided under the Income-tax Act, 1961 (43 of 1961), or the rules made thereunder to the extent that they are not contrary to the resolution arrived at.
Explanation.--For the purposes of rules 44G and 44H, "Competent Authority of India" shall mean an officer authorised by the Central Government for the purposes of discharging the functions as such."
(b) after Form No. 34E, the Form No. 34F shall be inserted.
| Rule of the 1962 Rules | Now, in the 2026 Rules |
|---|---|
| Rule 44G | rule 121 |
| Rule 44H | no counterpart recorded |
Forms it touches. Form No. 34F, Form No. 34E
the date of publication in the Official Gazette.
In an application in Form No. 34F to invoke the mutual agreement procedure under a double taxation avoidance agreement, and in the order giving effect to the resolution after withdrawal of the appeal.
Forms it names. Form No. 34E, Form No. 34F
Source: the Income Tax Department’s own published text — its page for this instrument.