What the courts have decided on section Rule 10MA, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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Sprinklr India P. Ltd. v DCIT
ITATHelps taxpayerNo later treatment found
My APA application is still pending and its rollback period covers the very year under appeal. Is that any answer to the recovery notice?
Yes, it is a ground for stay. Where the year under appeal falls within the rollback period of a pending APA application, the outcome of the APA proceeding has a direct bearing on that year, and the Tribunal will stay the balance of the demand. Here, with 20 per cent already deposited, the balance of Rs. 6,72,38,488 was stayed for 180 days or until disposal of the appeal, whichever is earlier.
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Sun Pharmaceutical Industries Ltd v ACIT
ITATHelps taxpayerNo later treatment found
Your APA for a later year accepts the foreign associated enterprise as the tested party. Can the TPO still make you the tested party in an open earlier year?
Not without the question being looked at again on the APA's basis. Following the Ahmedabad Bench's order in the assessee's own group for assessment year 2009-10, this Bench took the same view and restored the tested party issue to the Transfer Pricing Officer for fresh adjudication treating the associated enterprises as the tested party. The ground was allowed for statistical purposes.
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Ranbaxy Laboratories Ltd v DCIT
ITATHelps taxpayer
Your APA has no rollback for the year under appeal. Can you still make the TPO benchmark that year on the APA's method and tested party?
On this order, yes. The Bench held that although the APA signed for assessment year 2014-15 carried no rollback for the years in appeal, the principles it laid down for comparability analysis have persuasive value, and it drew support from Rule 10MA in applying the methodology accepted in the APA to the year in appeal. It held that the foreign associated enterprises, accepted as the tested party in the APA, were to be the tested party for the year in appeal too, and remitted the computation to the TPO with a direction to give due weight to the APA on the other issues as well.
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CBDT Circular No. 10/2015 — APA rollback
CBDT Circulars & InstructionsCuts both waysNo later treatment found
I want the four rollback years with my APA. Can I pick only the years that help me, and what will knock rollback out before I start?
You cannot pick and choose: the applicant has to either apply for all the four years or not apply at all, subject only to the transaction not existing in a year or the rollback conditions failing in a year. Rollback is not available for a year in which the return was filed under s.139(4), nor where the Tribunal has finally disposed of the appeal on the arm's length price of that transaction, and it can never reduce the total income or increase the loss declared in the return.
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s.92CC(4) — the five-year APA term and the year outside it
CBDT Circulars & InstructionsCuts both ways
My advance pricing agreement covers five years. What about the year just outside it - can the agreed margin be held against me, or held to my benefit, for that year?
Section 92CC(4) caps the agreement at such period not exceeding five consecutive previous years as may be specified in it, and s.92CC(3) gives the agreement its force only "in respect of which the advance pricing agreement has been entered into". Sub-section (9A) extends that backwards, but only so far: an agreement may, subject to prescribed conditions, determine the arm's length price or the attributable income for any period not exceeding four previous years preceding the first of the years covered by sub-section (4), and rule 10F(ha) calls those the rollback years. A year outside the five plus four is outside the agreement, and the Pune Bench has held in Tetra Pak India that the window works against the department too: the TPO may not benchmark an uncovered year against the margin agreed in the APA.
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.
