Section 286(9)

Section 286(9) — the law in short

What the courts have decided on section 286(9), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Statutory position — s.286(7) with Rule 10DB(6): the country-by-country threshold is six thousand four hundred crore rupees, and it is tested against the consolidated group revenue of the accounting year PRECEDING the reporting accounting year CBDT Circulars & InstructionsCuts both waysValidity unconfirmed
  Our group's consolidated revenue crossed the country-by-country threshold this year but was below it last year. Do we have to file for this year?
  No — and the reason is the year the test looks at. Section 286(7) provides that the section does not apply to an international group for an accounting year "if the total consolidated group revenue, as reflected in the consolidated financial statement for the accounting year preceding such accounting year does not exceed the amount, as may be prescribed". The prescribed amount is in Rule 10DB(6), which fixes it at six thousand four hundred crore rupees. So the test is applied to the consolidated group revenue of the year BEFORE the reporting accounting year, not to the reporting accounting year's own revenue. A group whose consolidated revenue was below Rs 6,400 crore in the preceding accounting year is outside s.286 for the year in question however large its revenue becomes in that year; a group that was above it in the preceding year is inside s.286 for the year in question even if its revenue collapses. Rule 10DB(7) supplies the conversion rule where the consolidated revenue is in a foreign currency: the telegraphic transfer buying rate on the last day of the accounting year preceding the accounting year.
• Statutory position — s.92D(1)(ii) and s.92D(4) with Rule 10DA: the master file — PART A OF FORM 3CEAA IS FILED BY EVERY CONSTITUENT ENTITY EVEN IF NEITHER THRESHOLD IS CROSSED, and the two thresholds that both have to be crossed before Part B is due CBDT Circulars & InstructionsCuts both waysValidity unconfirmed
  Our group is nowhere near the master file thresholds. Do we still have to file anything under Rule 10DA?
  Yes. This is the most-missed compliance in Indian transfer pricing. Rule 10DA(3) says in terms: "The constituent entity shall furnish Part A of Form No. 3CEAA even if the conditions specified under sub-rule (1) are not satisfied." Every constituent entity of an international group files Part A, regardless of any threshold. Part B — the substantive master file information in clauses (a) to (n) of Rule 10DA(1) — is due only where BOTH conditions in sub-rule (1) are satisfied: (i) the consolidated group revenue of the international group for the accounting year, as reflected in its consolidated financial statement, exceeds FIVE HUNDRED CRORE RUPEES; AND (ii) the aggregate value of international transactions during the accounting year, as per the books of account, exceeds FIFTY CRORE RUPEES, or, in respect of purchase, sale, transfer, lease or use of intangible property, exceeds TEN CRORE RUPEES. The obligation itself comes from s.92D(1)(ii), which requires every person being a constituent entity of an international group to keep and maintain such information and document in respect of an international group as may be prescribed, and from s.92D(4), which requires the person referred to in that clause to furnish it to the authority prescribed under s.286(1) in the prescribed manner and by the prescribed date. Section 92D was substituted in this form by Act No. 23 of 2019 with effect from 1 April 2020; for assessment years 2018-19 and 2019-20 the same obligation sat in a proviso to s.92D(1), and s.92D(4) then referred to "the person referred to in the proviso to sub-section (1)". Rule 10DA(2) fixes that date as the s.139(1) due date for the return of income, and Rule 10DA(4) allows one designated constituent entity to file for all of them, provided the designation is conveyed in Form No. 3CEAB to the Joint Director referred to in Rule 10DB(1) THIRTY DAYS BEFORE the due date for furnishing Form No. 3CEAA.
• Statutory position — s.286 with Rule 10DB: country-by-country reporting — who notifies in Form 3CEAC, who files the report in Form 3CEAD within twelve months, when the burden falls on the Indian constituent entity instead, and the alternate reporting entity route out CBDT Circulars & InstructionsCuts both waysValidity unconfirmed
  We are the Indian subsidiary of a foreign parent. Do we have to file a country-by-country report ourselves, or only tell the department who does, and by when?
  Two obligations, and they fall on different people. Under s.286(1), EVERY constituent entity resident in India whose parent entity is not resident in India must notify the prescribed authority whether it is the alternate reporting entity of the international group, or else give the details of the parent entity or alternate reporting entity and the country of which they are resident. Rule 10DB(2) requires that notification in Form No. 3CEAC, and it must be made TWO MONTHS PRIOR to the due date for furnishing the report under s.286(2). Under s.286(2), a parent entity or alternate reporting entity RESIDENT IN INDIA must furnish the report itself, "within a period of twelve months from the end of the said reporting accounting year", and Rule 10DB(3) prescribes Form No. 3CEAD for it. Under s.286(4), the burden shifts on to an Indian constituent entity that is not the reporting entity where the parent is resident in a country that does not require such a report, or with which India has no exchange agreement, or where a systemic failure has been intimated; Rule 10DB(4) gives it twelve months from the end of the reporting accounting year, or six months from the end of the month in which a systemic failure was intimated. The proviso to s.286(4) lets a group with several Indian constituent entities designate one to file, and Rule 10DB(5) requires that designation to be conveyed in Form No. 3CEAE. Section 286(5) provides a complete escape from sub-section (4) where an alternate reporting entity has filed the report with its own country's tax authority and five conditions are all satisfied, including that the said country has an exchange agreement with India and that the prescribed authority here has been informed under sub-section (1). Section 286(6) lets the prescribed authority call for information to test the accuracy of the report, by notice, within thirty days, extendable by a further period not exceeding thirty days on an application.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.