Rule 108 — Preliminary processing of application.
Sub-rule (1) requires an application filed in Form No. 51 to be complete in all respects and accompanied by the requisite documents.
Sub-rule (2) identifies who examines it — the Principal Chief Commissioner of Income-tax (International taxation) in the case of a unilateral agreement, and the competent authority of India in the case of a bilateral or multilateral agreement — and requires a deficiency letter to be served on the applicant if any defect is noticed in the Form No. 51 application, if any relevant document is not attached, or if the application is not in accordance with the understanding reached in the pre-filing consultation referred to in rule 105.
Sub-rule (3) requires that deficiency letter to be served within one month from the end of the month in which the application was received. Sub-rule (4) gives the applicant thirty days from the date of receipt of the deficiency letter to remove the deficiency or modify the application.
Sub-rule (5) allows the Principal Chief Commissioner of Income-tax (International Taxation) or the competent authority of India, on being satisfied, to pass an order that the application shall not be allowed to be proceeded with, where the application is defective and the defect is not removed in accordance with sub-rule (4). Sub-rule (6) requires that order to be passed only after a reasonable opportunity of being heard is given to the applicant. Sub-rule (7) requires the fee paid by the applicant to be refunded where an application is not allowed to be proceeded with under sub-rule (5).
An advance pricing agreement takes years to negotiate, and the negotiation should not begin on an incomplete file. This rule inserts a screening stage between filing and substantive processing: a defined examiner, a defined ground of objection, a fixed time in which the objection must be raised, and a fixed time in which it must be answered. It also protects the applicant at both ends — the application cannot be dropped without a hearing, and where it is dropped the fee comes back.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Time to serve a deficiency letter | Within one month from the end of the month in which the application has been received | Where a defect is noticed, a relevant document is missing, or the application departs from the pre-filing consultation understanding | Sub-rule (3) |
| Time to cure the deficiency | Within a period of thirty days from the date of receipt of the deficiency letter | The applicant must remove the deficiency or modify the application | Sub-rule (4) |
The two clocks run in opposite directions and from different events: the Department's month runs from the end of the month of receipt of the application, while the applicant's thirty days run from the date of receipt of the deficiency letter, not from its date of issue. Departing from what was settled in the pre-filing consultation under rule 105 is itself a deficiency under sub-rule (2)(c), so the consultation is not merely preparatory. An order refusing to let the application proceed is not automatic on the expiry of the thirty days — sub-rule (5) requires the authority to be satisfied, and sub-rule (6) requires a hearing first. Where such an order is made, sub-rule (7) requires the fee to be refunded; the rule states no figure for that fee.
A company files an application in Form No. 51 on 12 May. A relevant document is missing, so the deficiency letter must be served by 30 June, being one month from the end of May. The company receives the letter on 25 June and has until 25 July to supply the document or modify the application. If it does not, the Principal Chief Commissioner may, after hearing it, order that the application not be proceeded with, and the fee it paid is refunded.
An applicant meets this rule in the deficiency letter that follows the filing of Form No. 51, in the correspondence curing the defect, and in any hearing before an order refusing to let the application proceed.
The deficiency letter in sub-rule (2) shall be served on the applicant within one month from the end of the month in which the application has been received.
The applicant shall remove the deficiency or modify the application within a period of thirty days from the date of receipt of the deficiency letter.
In a case where an application is not allowed to be proceeded with under sub-rule (5), the fee paid by the applicant shall be refunded.
