Rule 105 — Pre-filing consultation.
Sub-rule (1) allows an eligible person to make an application in Form No. 50 to the Principal Chief Commissioner of Income-tax (International Taxation) for a pre-filing consultation. Sub-rule (2) requires the team, on receipt of the application, to hold the pre-filing consultation with the eligible person who applied. Sub-rule (3) requires the competent authority of India or his representative to be associated where the consultation involves a bilateral or multilateral agreement.
Sub-rule (4) sets out what the consultation is to do, among other things: determine the scope of the agreement, identify transfer pricing issues, determine the suitability of the international transaction for the agreement, and discuss broad terms of the agreement.
Sub-rule (5) is the disclaimer. The pre-filing consultation shall neither bind the Board or the applicant to enter into an agreement or initiate the agreement process, nor be deemed to mean that the person has applied for entering into an agreement. Sub-rule (6) provides that the rule shall not apply in the case of renewal of the agreement.
An advance pricing agreement is a long and expensive process, and both sides benefit from testing the ground first. This rule creates that space and then carefully denies it any legal effect: sub-rule (5) makes the consultation non-binding on both the Board and the applicant, and stops it being read as an application. Sub-rule (6) keeps it out of renewals, where the ground has already been covered.
Nothing said in a pre-filing consultation commits anyone. Sub-rule (5)(a) leaves both the Board and the applicant free to walk away, and sub-rule (5)(b) means the consultation does not start the clock or count as an application, so a person who consults and then decides to proceed must still apply separately. The consultation is compulsory only in the sense that once the application is made under sub-rule (1), sub-rule (2) requires the team to hold it. Where the contemplated agreement is bilateral or multilateral, sub-rule (3) brings in the competent authority of India, so the discussion is not confined to the domestic team. A renewal is outside the rule altogether under sub-rule (6).
A company contemplating an advance pricing agreement on a bilateral basis files Form No. 50. The team holds the consultation with the competent authority of India associated, and the discussion identifies transfer pricing issues and the likely scope. The company then decides not to proceed. Nothing follows: under sub-rule (5) neither the Board nor the company is bound, and the consultation is not deemed to be an application.
You meet it at the very start of the advance pricing agreement process, in the Form No. 50 application and the meeting that follows. A taxpayer renewing an existing agreement never meets it, because sub-rule (6) takes renewals out.
An eligible person may make an application in Form No. 50 to the Principal Chief Commissioner of Income-tax (International Taxation) for a pre-filing consultation.
The provisions of this rule shall not apply in the case of renewal of the agreement.