Insertion of new sections 92CC and 92CD.
39. After section 92CB of the Income-tax Act, the following sections shall be inserted with effect from the 1st day of July, 2012, namely:—
Advance pricing agreement.
‘92CC. (1) The Board, with the approval of the Central Government, may enter into an advance pricing agreement with any person, determining the arm’s length price or specifying the manner in which arm’s length price is to be determined, in relation to an international transaction to be entered into by that person.
(2) The manner of determination of arm’s length price referred to in sub-section (1), may include the methods referred to in sub-section (1) of section 92C or any other method, with such adjustments or variations, as may be necessary or expedient so to do.
(3) Notwithstanding anything contained in section 92C or section 92CA, the arm’s length price of any international transaction, in respect of which the advance pricing agreement has been entered into, shall be determined in accordance with the advance pricing agreement so entered.
(4) The agreement referred to in sub-section (1) shall be valid for such period not exceeding five consecutive previous years as may be specified in the agreement.
(5) The advance pricing agreement entered into shall be binding—
(a) on the person in whose case, and in respect of the transaction in relation to which, the agreement has been entered into; and
(b) on the Commissioner, and the income-tax authorities subordinate to him, in respect of the said person and the said transaction.
(6) The agreement referred to in sub-section (1) shall not be binding if there is a change in law or facts having bearing on the agreement so entered.
(7) The Board may, with the approval of the Central Government, by an order, declare an agreement to be void ab initio, if it finds that the agreement has been obtained by the person by fraud or misrepresentation of facts.
(8) Upon declaring the agreement void ab initio,—
(a) all the provisions of the Act shall apply to the person as if such agreement had never been entered into; and
(b) notwithstanding anything contained in the Act, for the purpose of computing any period of limitation under this Act, the period beginning with the date of such agreement and ending on the date of order under sub-section (7) shall be excluded:
Provided that where immediately after the exclusion of the aforesaid period, the period of limitation, referred to in any provision of this Act, is less than sixty days, such remaining period shall be extended to sixty days and the aforesaid period of limitation shall be deemed to be extended accordingly.
(9) The Board may, for the purposes of this section, prescribe a scheme specifying therein the manner, form, procedure and any other matter generally in respect of the advance pricing agreement.
(10) Where an application is made by a person for entering into an agreement referred to in sub-section (1), the proceeding shall be deemed to be pending in the case of the person for the purposes of the Act.
Effect to advance pricing agreement.
92CD. (1) Notwithstanding anything to the contrary contained in section 139, where any person has entered into an agreement and prior to the date of entering into the agreement, any return of income has been furnished under the provisions of section 139 for any assessment year relevant to a previous year to which such agreement applies, such person shall furnish, within a period of three months from the end of the month in which the said agreement was entered into, a modified return in accordance with and limited to the agreement.
(2) Save as otherwise provided in this section, all other provisions of this Act shall apply accordingly as if the modified return is a return furnished under section 139.
(3) If the assessment or reassessment proceedings for an assessment year relevant to a previous year to which the agreement applies have been completed before the expiry of period allowed for furnishing of modified return under sub-section (1), the Assessing Officer shall, in a case where modified return is filed in accordance with the provisions of sub-section (1), proceed to assess or reassess or recompute the total income of the relevant assessment year having regard to and in accordance with the agreement.
(4) Where the assessment or reassessment proceedings for an assessment year relevant to the previous year to which the agreement applies are pending on the date of filing of modified return in accordance with the provisions of sub-section (1), the Assessing Officer shall proceed to complete the assessment or reassessment proceedings in accordance with the agreement taking into consideration the modified return so furnished.
(5) Notwithstanding anything contained in section 153 or section 153B or section 144C,—
(a) the order of assessment, reassessment or recomputation of total income under sub-section (3) shall be passed within a period of one year from the end of the financial year in which the modified return under sub-section (1) is furnished;
(b) the period of limitation as provided in section 153 or section 153B or section 144C for completion of pending assessment or reassessment proceedings referred to in sub-section (4) shall be extended by a period of twelve months.
(6) For the purposes of this section,—
(i) “agreement” means an agreement referred to in sub-section (1) of section 92CC;
(ii) the assessment or reassessment proceedings for an assessment year shall be deemed to have been completed where—
(a) an assessment or reassessment order has been passed; or
(b) no notice has been issued under sub-section (2) of section 143 till the expiry of the limitation period provided under the said section.’.
Notes on Clauses:
Clause 39 of the Bill seeks to insert new sections 92CC and 92CD in the Income-tax Act relating to advance pricing agreement and effect to advance pricing agreement.
The aforesaid new section 92CC is proposed to provide that the Board, with the approval of the Central Government, may enter into an advance pricing agreement with any person, determining the arm’s length price, specifying the manner in which arm’s length price is to be determined, in relation to an international transaction, to be entered into by that person.
It is further proposed to provide that the manner of determination of arm’s length price referred to in sub-section (1) may include the methods, as referred to in sub-section (1) of section 92C or any other method, with such adjustments or variations, as may be necessary or expedient so to do.
It is also proposed to provide that the arm’s length price of any international transaction, in respect of which the advance pricing agreement has been entered into, notwithstanding anything contained in section 92C or section 92CA, shall be determined in accordance with the advance pricing agreement so entered.
It is also proposed to provide that the agreement referred to in sub-section (1) shall be valid for such period as specified in the agreement which in no case shall exceed five consecutive previous years.
It is also proposed to provide that the advance pricing agreement entered into shall be binding on the person in whose case, and in respect of the transaction in relation to which, the agreement has been entered into and on the Commissioner, and the income-tax authorities subordinate to him, in respect of the said person and the said transaction. However, the agreement shall not be binding if there is a change in law or facts having bearing on the agreement so entered.
It is also proposed to provide that the Board may with the approval of the Central Government, by an order, declare an agreement to be void ab initio, if it finds that the agreement has been obtained by the person by fraud or misrepresentation of facts.
It is also proposed to provide that upon declaring the agreement void ab initio all the provisions of the Act shall apply to the person as if such agreement had never been entered into and notwithstanding anything contained in the Act, for the purpose of computing any period of limitation under this Act, the period beginning with the date of such agreement and ending on the date of the order under sub-section (7) shall be excluded. However, where immediately after the exclusion of the aforesaid period, the period of limitation, referred to in any provision of this Act, is less than sixty days, such remaining period shall be extended to sixty days and the aforesaid period of limitation shall be deemed to be extended accordingly.
It is also proposed to provide that the Board may, for the purposes of this section, prescribe a Scheme specifying therein the manner, form, procedure and any other matter generally in respect of the advance pricing agreement.
It is also proposed to provide that where an application is made by a person for entering into an agreement referred to in sub-section (1), proceedings shall be deemed to be pending in the case of the person for purposes of the Act.
The aforesaid new section 92CD is proposed to provide that notwithstanding anything to the contrary contained in section 139, where any person has entered into an agreement and prior to the date of entering into the agreement any return of income has been furnished under the provisions of section 139 for any assessment year relevant to a previous year to which such agreement applies, such person shall furnish, within a period of three months from the end of the month in which the said agreement was entered into, a modified return in accordance with and limited to the agreement.
It is further proposed to provide that save as otherwise provided in this section, all the other provisions of this Act shall apply accordingly as if the modified return is a return furnished under section 139.
It is also proposed to provide that if the assessment or reassessment proceedings for an assessment year relevant to a previous year to which the agreement applies have been completed before the expiry of period allowed for furnishing of modified return under sub-section (1) and the Assessing Officer shall, in a case where modified return is filed in accordance with the provisions of sub-section (1), proceed to assess or reassess or re-compute the total income of the relevant assessment year having regard to and in accordance with the agreement.
It is also proposed to provide that the where the assessment or reassessment proceedings for an assessment year relevant to the previous year to which the agreement applies are pending on the date of filing of modified return in accordance with the provision of sub-section (1), the Assessing Officer shall proceed to complete the assessment or reassessment proceedings in accordance with the agreement taking into consideration the modified return so furnished.
It is also proposed to provide that notwithstanding anything contained in section 153 or section 153B or section 144C the order of assessment, reassessment or re-computation of total income under sub-section (2) shall be passed within a period of one year from the end of the financial year in which the modified return under sub-section (1) is furnished and the period of limitation as provided in section 153 or section 153B or section 144C, for completion of pending assessment or reassessment proceedings referred to in sub-section (3) shall be extended by a period of twelve months.
It is also proposed to define the expressions “agreement” and the deemed provision relating to completion of assessment or reassessment proceedings for an assessment year.
These amendments will take effect from 1st July, 2012.
