CBDT Notification Reg Roll Back Of Advance Pricing Agreement (APA)

The CBDT has issued Notification dated 14.03.2015 to make rules relating to Roll Back of an Advance Pricing Agreement (APA). As per sub-rule (5) of the newly prescribed rule 10MA, where an application for entering into an advance pricing agreement has been filed prior to 1.01.2015, the request for rollback in the newly prescribed Form No. 3CEDA may be filed at any time on or before 31.03.2015. Similarly, where an advance pricing agreement has been entered into before 1.01.2015, the said form may be filed before 31.03.2015.

The rules allow a four year roll back of advance pricing agreements (APAs). APAs were introduced to allow MNCs to declare certain value of their cross-border transactions which will not attract an audit for income suppression for five prospective years.

The IT (Third Amendment) Rules, 2015, allow retrospective application of APAs which will benefit the companies to avoid rigorous audits of cross-border transactions and the disputes arising from it. The provision of APA roll back was introduced in the July 2014 Budget but the procedure has been notified now. India has already signed five APAs with individual companies and one bilateral APA with a Japanese company, believed to be Mitsui, and the tax authorities in Japan. These agreements are seen as instruments to ensure tax certainty for MNCs.

The new rules stated the value of cross-border transactions to be declared, or the manner to compute it for any of the past years, has to be the same as the one agreed for future years. Any appeals filed by the company or tax department before tribunals and high courts for any of the past years for which APA roll back is sought, will be withdrawn by the respective parties.