INDIA Law and Practice Contributed by: Deepak Chopra, Harpreet Singh Ajmani, Rohan Khare, Pulkit Pandey and Priyam Bhatnagar, AZB & Partners
Commissioner, four Additional Commissioners and four Deputy Commissioners. 7.3 Co-Ordination Between the APA Process and Mutual Agreement Procedures MAP and APA are two alternate mechanisms for resolving income tax disputes pending under the IT Act, which in turn provides finality on such pending disputes to the taxpayers being non- resident(s). Further, these alternate mechanisms significantly contribute to promoting an investor- friendly environment and ease of doing business initiative launched by the government of India. MAP is governed by the provision of the DTAA(s) entered into by India wherein, as per the proce - dure specified in the IT Act, the taxpayer under - going scrutiny assessment may apply to the competent authority of either country for resolv - ing such dispute by way of negotiation between the competent authorities of both the countries. Whereas, APA originates from Section 92CC of the IT Act which provides that an eligible tax - payer could enter into APA for determining the ALP of the international transactions entered into with related parties by the taxpayer or for ascertaining the taxability of the income attribut - able under Section 9(1)(i) of the IT Act. In respect of a bilateral or multilateral APA, the competent authorities of the countries involved (including India) are required to first reach an arrange - ment through MAP. This arrangement must be accepted by the taxpayer before a bilateral or multilateral APA can be entered into. 7.4 Limits on Taxpayers/Transactions Eligible for an APA In terms of Rule 10G of the IT Rules, any taxpay - er who has entered into an international transac - tion or is contemplating to enter into an interna - tional transaction, is eligible to apply for APA.
Further, Section 92CC(1) of the IT Act provides that APA can be entered into in respect of all the international transactions and transactions car - ried out by a non-resident under Section 9(2)(i) of the IT Act and, hence, there are no monetary thresholds prescribed for being eligible to apply for an APA. Further, Unilateral APAs, Bilateral APAs and Mul - tilateral APAs have been defined under the IT Rules, as follows. • As per Rule 10F(k), “unilateral agreement” means an agreement between the CBDT and the applicant, which is neither a bilateral nor multilateral agreement. • As per Rule 10F(c), “bilateral agreement” means an agreement between the CBDT and the applicant, subsequent to, and based on, any agreement referred to in Rule 44GA between the competent authority in India with the competent authority of the other country regarding the most appropriate transfer pric - ing method or the ALP. • As per Rule 10F(h), “multilateral agreement” means an agreement between the CBDT and the applicant, subsequent to, and based on, any agreement referred to in Rule 44GA between the competent authority in India with the competent authorities in the other coun - tries regarding the most appropriate transfer pricing method or the arm’s length price. 7.5 APA Application Deadlines The timeline for an APA has been prescribed under Rule 10I of the IT Rules, as follows. • In respect of transactions which are of a continuing nature, ie, dealings that are already occurring/recurring in nature – at any time before the 1st day of the previous year
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