Page 39 - Union Budget_2019

Union Budget 2019

INTERNATIONAL TAXATION

9.1 Clarification with regard to power of the Assessing Officer in respect of modified return of

income filed in pursuance to signing of the Advance Pricing Agreement (APA)

Central Board of Direct Taxes ("CBDT"), with the approval of the Central Government, can enter into an APA
with any person for determining the Arm’s Length Price ("ALP") or specifying the manner in which ALP is

to be determined. Further, an APA can have retrospective effect upto 4 years.

In order to give effect to an APA, Section 92CD provides for procedural compliances in relation to APA,

which inter alia includes filing of modified return of income by the taxpayer and manner of completion of
assessments by the AO in compliance with the terms of APA.

Section 92CD (3) provides that when assessment or reassessment proceedings for an assessment year to

which APA applies have been completed before the due date of filing the modified return of income, the AO
can proceed to “assess or reassess or recompute” the total income in compliance with the APA. The intention

of the law-maker while using the words “assess or reassess or recompute" was to allow AO to merely modify
the total income consequent to modified return filed in pursuance of APA and not let AO to start afresh the

assessment or reassessment proceedings in respect of completed assessments or reassessments.

Therefore, it is proposed to amend Section 92CD (3) to allow AO only to pass an order modifying the total
income of the relevant assessment year determined in such assessment or reassessment, based on the terms

specified in APA.

This amendment will take effect from 1st September, 2019.

The proposed amendment has removed the ambiguity for AO in relation to the assessment or
reassessment in case APA is finalised.

9.2 Clarification regarding definition of the “accounting year” in Section 286 of the Act

Section 286 contains provisions relating to specific reporting regime in the form of Country-by-Country

Report (CbCR) whereby, inter alia, alternate reporting entity resident in India needs to furnish a report to
the prescribed authorities for every accounting year within the stipulated time period.

37