Page 40 - Union Budget_2019

Union Budget 2019

There were concerns raised wherein the ultimate parent entity of the alternate reporting entity is not

resident in India, the accounting year for alternate resident entity shall always be as that of such ultimate
parent entity and not the previous year of the alternate reporting entity which is resident in India.

Thus, to remove the anomaly, it is proposed to amend Section 286 to provide that in case of alternate

reporting entity of an international group, the parent entity of which is not resident in India, the reporting
accounting year for alternate reporting year shall be that which is applicable to ultimate parent entity.

The amendment will take effect retrospectively from the 1st April, 2017 and will, accordingly, apply in
relation to the assessment year 2017-18 and subsequent assessment years.

The proposed amendment is clarificatory in nature.

9.3 Clarification with regard to provisions of secondary adjustment and giving an option to assessee
to make one-time payment of tax

Section 92CE provides for secondary adjustment in books of an entity and its associated enterprise (AE)
where primary adjustment is made and requires the excess money with the AE to be repatriated in India

within 90 days. If the repatriation is not done within the specified period, such amount shall be deemed to
be an advance made by the Indian entity and interest on such advance shall be chargeable to tax.

The provisions of secondary adjustment shall be applicable from A Y 2016-17 and only if the primary
adjustment does not exceed Rs. 1 crore.

There were several ambiguities in the effectiveness and implementation of provision of secondary
adjustment. It is hereby proposed to amend Section 92CE and provide the following clarifications: -

• Threshold limit of Rs. 1 crore and applicability from AY2016-17 are alternate conditions. Thus,

secondary adjustment need not be made if any one of the conditions is not satisfied.

• In case of primary adjustment determined by an APA, provisions of secondary adjustment shall be
applicable only if the APA is entered into on or after 1 April 2017; however, no refund of the taxes
st
already paid till date, under the erstwhile section before proposed amendment, would be allowed

• The excess money may be repatriated from any of the AEs of the assessee which is not resident in
India

• The repatriation and interest calculation shall be with respect to excess money or part thereof

The above amendments will take effect retrospectively from the 1st April, 2018 and will, accordingly, apply

in relation to the assessment year 2018-19 and subsequent assessment years.

38