What the courts have decided on section 92CC(7), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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PCIT-2 v EYGBS (India) Pvt Ltd
High CourtHelps taxpayer
Your client offered a transfer pricing adjustment itself because its APA required it. The officer says s.92C(4) bars the s.10AA exemption on that extra income. Is he right?
No. Where the assessee computes the arm's length price itself pursuant to an APA entered into with the CBDT, none of the conditions in s.92C(3) is attracted, and s.92C(4) therefore never comes into operation at all. The bar in s.92C(4) is aimed at income by which the Assessing Officer enhances the declared total income, not at figures the assessee has itself declared in conformity with its APA. The Revenue's appeals were dismissed.
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s.92CC(7) to (9) — APA declared void ab initio
CBDT Circulars & InstructionsHelps department
The Board says my advance pricing agreement was obtained by misrepresentation. What can it actually do, and what happens to the years the agreement covered?
Section 92CC(7) allows the Board, with the approval of the Central Government, to declare an advance pricing agreement void ab initio by an order, on one ground and one ground only — that the agreement was obtained by the person by fraud or misrepresentation of facts. Section 92CC(8) then applies the Act to him as if the agreement had never been entered into, and takes the whole stretch between the date of the agreement and the date of the s.92CC(7) order out of every period of limitation in the Act, with a proviso lifting whatever is left to sixty days. Rule 10R(6) requires the order declaring the agreement void to be in writing and to give reasons, including reasons for not accepting the assessee's submissions.
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Rule 10Q and Rule 10R — revision and cancellation of an APA
CBDT Circulars & InstructionsCuts both ways
The Board wants to revise, or to cancel, my advance pricing agreement. On what grounds can it, and what am I entitled to before it does?
Rule 10Q allows the Board to revise a concluded agreement on three grounds — a change in critical assumptions or failure to meet a condition, a change in law that modifies a matter covered by the agreement without making it non-binding, and a request from the competent authority of the other country in a bilateral or multilateral case. Except where the assessee himself asked for the revision, the agreement cannot be revised unless he has been heard and is in agreement with the proposed revision; if he is not, Rule 10Q(4) sends the matter to cancellation under Rule 10R. Rule 10R lists four cancellation grounds, requires an opportunity of being heard, and requires a written order giving reasons and specifying the date from which the cancellation takes effect.
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.
