Amended and updated notes on section 92CC of Income Tax Act 1961 as amended by the Finance Act 2022 and Income-tax Rules, 1962. Detail discussion on provisions and rules related to Advance pricing agreement.
Chapter X (Sections 92 to 94B) of the Income Tax Act 1961 deals with the provisions related to special provisions relating to avoidance of tax. Section 92CC of IT Act 1961-2023 provides for reference to Advance pricing agreement.
Recently, we have discussed in detail section 92CB (Power of Board to make safe harbour rules) of IT Act 1961. Today, we learn the provisions of section 92CC of Income-tax Act 1961. The amended provision of section 92CC is effective for financial year 2022-23 relevant to the assessment year 2023-24.
In this article, you will learn detail of the provisions of section 92CC of the Income Tax Act, 1961 Bare Act read with the Income-tax Rules, 1962, regulations, notifications, circulars, orders and Press Release by CBDT, Income Tax Department and the Ministry of Law and Justice, Government of India.
Section-92CC: Advance pricing agreement
Section 92CC(1) of Income Tax Act
The Board, with the approval of the Central Government, may enter into an advance pricing agreement with any person, determining the—
- (a) arm’s length price or specifying the manner in which the arm’s length price is to be determined, in relation to an international transaction to be entered into by that person;
- (b) income referred to in clause (i) of sub-section (1) of section 9, or specifying the manner in which said income is to be determined, as is reasonably attributable to the operations carried out in India by or on behalf of that person, being a non-resident.
[Sub-section(1) of section 92CC has been amended w.e.f. 01.04.2020 by the Finance Act 2020]
Section 92CC(2) of Income Tax Act
The manner of determination of the arm’s length price referred to in clause (a) or the income referred to in clause (b) of sub-section (1), may include the methods referred to in sub-section (1) of section 92C or the methods provided by rules made under this Act, respectively, with such adjustments or variations, as may be necessary or expedient so to do.
[Sub-section(2) of section 92CC has been amended w.e.f. 01.04.2020 by the Finance Act 2020]
Section 92CC(3) of Income Tax Act
Notwithstanding anything contained in section 92C or section 92CA or the methods provided by rules made under this Act, the arm’s length price of any international transaction or the income referred to in clause (b) of sub-section (1), in respect of which the advance pricing agreement has been entered into, shall be determined in accordance with the advance pricing agreement so entered.
[Sub-section(3) of section 92CC has been amended w.e.f. 01.04.2020 by the Finance Act 2020]
Section 92CC(4) of Income Tax Act
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.
Section 92CC(5) of Income Tax Act
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 Principal Commissioner or Commissioner, and the income-tax authorities subordinate to him, in respect of the said person and the said transaction.
Section 92CC(6) of Income Tax Act
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.
Section 92CC(7) of Income Tax Act
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.
Section 92CC(8) of Income Tax Act
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.
Section 92CC(9) of Income Tax Act
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.
Section 92CC(9A) of Income Tax Act
The agreement referred to in sub-section (1), may, subject to such conditions, procedure and manner as may be prescribed, provide for determining the—
- (a) arm’s length price or specify the manner in which the arm’s length price shall be determined in relation to the international transaction entered into by the person;
- (b) income referred to in clause (i) of sub-section (1) of section 9, or specifying the manner in which the said income is to be determined, as is reasonably attributable to the operations carried out in India by or on behalf of that person, being a non-resident,
during any period not exceeding four previous years preceding the first of the previous years referred to in sub-section (4), and the arm’s length price of such international transaction or the income of such person shall be determined in accordance with the said agreement.
[Sub-section(9A) of section 92CC has been amended w.e.f. 01.04.2020 by the Finance Act 2020]
Section 92CC(10) of Income Tax Act
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.