Section 92CB

Section 92CB — the law in short

What the courts have decided on section 92CB, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• DCIT v Kantar GDC India Private Limited ITATHelps departmentValidity unconfirmed
  The TPO is charging notional interest on my overdue receivables from my associated enterprise. Can I argue for a 90-day credit period by analogy to the secondary adjustment repatriation window in s.92CE and Rule 10CB?
  No, on this Tribunal's view. Section 92CE read with Rule 10CB operates only where a primary adjustment has been made in one of the specific situations the section lists, and the 90-day repatriation window attaches to that specific machinery; it cannot be borrowed as a general benchmark for the credit period allowable on outstanding receivables. The Tribunal instead directed the officer to adopt the credit period the TPO himself had adopted in the assessee's own case for the immediately preceding year that had reached the Tribunal.
• Iomedia India Pvt Ltd v ACIT ITATCuts both waysValidity unconfirmed
  I opted into the safe harbour and billed my AE at the prescribed mark-up. The TPO has still made an adjustment for interest on receivables collected late. Can he do that?
  Yes. Safe harbour under s.92CB and the Rule 10T series covers only an 'eligible international transaction' as exhaustively defined in Rule 10TC, and interest on outstanding receivables is not among clauses (i) to (x) of that definition. So the adjustment on delayed receivables is not subsumed in the mark-up offered under the safe harbour rules. On quantum, the Tribunal substituted LIBOR plus 200 basis points for the LIBOR plus 400 basis points adopted by the TPO and DRP.
• Statutory position — s.92CE(1): the FIVE gateways into a secondary adjustment, the one crore threshold, the AY 2016-17 cut-off, and the word "and" that was retrospectively replaced by "or" CBDT Circulars & InstructionsCuts both ways
  The TPO's order says I must now make a secondary adjustment. Which primary adjustments actually trigger s.92CE, and is there any threshold or year below which the section simply does not apply to me?
  Section 92CE(1) is triggered by a primary adjustment to transfer price arising in any one of FIVE ways — made suo motu by the assessee in his return; made by the Assessing Officer and accepted by the assessee; determined by an advance pricing agreement entered into under s.92CC on or after 1 April 2017; made under the safe harbour rules framed under s.92CB; or arising from a resolution under the mutual agreement procedure under an agreement entered into under s.90 or s.90A. In any of those cases "the assessee shall make a secondary adjustment". The first proviso then takes the case out of the section altogether if EITHER (i) the amount of primary adjustment made in any previous year does not exceed one crore rupees, OR (ii) the primary adjustment is made in respect of an assessment year commencing on or before 1 April 2016. The word joining those two limbs was originally "and"; it was substituted by "or" by Act No. 23 of 2019 with retrospective effect from 1 April 2018, and that single word is what makes the exclusions workable.
• Statutory position — Rule 10CB: the five different starting points for the ninety-day repatriation clock, and the two SEPARATE interest rate bases — SBI one-year MCLR plus 325 basis points for a rupee transaction, six-month LIBOR plus 300 basis points for a foreign-currency one CBDT Circulars & InstructionsCuts both waysValidity unconfirmed
  My primary adjustment stands and the money is still with my overseas associated enterprise. When exactly do my ninety days start, and at what rate is the deemed advance to be charged interest?
  Rule 10CB(1) gives the repatriation window as "on or before ninety days" from a starting point that differs with the source of the primary adjustment: from the s.139(1) due date where the adjustment was made suo motu in the return; from the date of the order of the Assessing Officer or the appellate authority where the adjustment in that order was accepted; where the adjustment is determined by an APA, from the date of filing the s.139(1) return if the APA was entered into on or before the due date, and from the END OF THE MONTH in which the APA was entered into if it came later; from the s.139(1) due date where the safe harbour option was exercised; and from the date the Assessing Officer gives effect under rule 44H to a mutual agreement procedure resolution. Rule 10CB(2) then fixes two different rate bases, and they are not interchangeable: for a transaction denominated in INDIAN RUPEES the imputed per annum interest is "at the one year marginal cost of fund lending rate of State Bank of India as on 1st of April of the relevant previous year plus three hundred twenty five basis points"; for a transaction denominated in FOREIGN CURRENCY it is "at six month London Interbank Offered Rate as on 30th September of the relevant previous year plus three hundred basis points". Clause (ii) still names LIBOR. LIBOR settings have been permanently discontinued and no replacement benchmark has been substituted into this rule, so for recent previous years the foreign-currency limb prescribes a rate that may not exist for 30 September of the relevant year.

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.