AMENDMENT IN RULES 10A, 10AB, 10B, 10C, 10D & 10E AND SUBSTITUTION OF FORM NO.3CEB : NOTIFICATION NO.41/2013 [F.NO.142/42/2012-TPL]/SO 1491(E), DATED 10-6-2013

INCOME-TAX (SIXTH AMENDMENT) RULES, 2013 – AMENDMENT IN RULES 10A, 10AB, 10B, 10C, 10D & 10E AND SUBSTITUTION OF FORM NO.3CEB

NOTIFICATION NO.41/2013 [F.NO.142/42/2012-TPL]/SO 1491(E), DATED 10-6-2013

In exercise of the powers conferred by sub-sections (1) and (2) of section 92C, section 92D and section 92E read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-

1. (1). These rules may be called the Income-tax (Sixth Amendment) Rules, 2013.

(2). They shall be deemed to have come into force with effect from the 1st day of April, 2013.

2. In rule 10A of the Income-tax Rules, 1962 (hereafter referred to as the principal rules), –

(i)

 for the figures and letter “10B”, the figures and letters “10AB” shall be substituted; 

(ii)

 the clause (a) shall be renumbered as clause (ab) and before the clause as so renumbered, the following clauses shall be inserted, namely: – 

‘(a)

 “associated enterprise” shall,- 

(i)

 have the same meaning as assigned to it in section 92A; and 

(ii)

 in relation to a specified domestic transaction entered into by an assessee, include – 

(A)

 the persons referred to in clause (b) of sub-section (2) of section 40A in respect of a transaction referred to in clause (a) of sub-section (2) of the said section;

(B)

 other units or undertakings or businesses of such assessee in respect of a transaction referred to in section 80A or, as the case may be, sub-section (8) of section 80-IA;

(C)

 any other person referred to in sub-section (10) of section 80-IA in respect of a transaction referred to therein;

(D)

 other units, undertakings, enterprises or business of such assessee, or other person referred to in sub-section (10) of section 80-IA, as the case may be, in respect of a transaction referred to in section 10AA or the transactions referred to in Chapter VI-A to which the provisions of sub-section (8) or, as the case may be, the provisions of sub-section (10) of section 80-IA are applicable;

(aa)

 “enterprise” shall have the same meaning as assigned to it in clause (iii) of section 92F and shall, for the purposes of a specified domestic transaction, include a unit, or an enterprise, or an undertaking or a business of a person who undertakes such transaction.’. 

3. In rule 10AB of the principal rules, after the words “international transaction”, the words “or a specified domestic transaction” shall be inserted.

4. In rule 10B of the principal rules, –

(i)

 for the words “an international transaction”, wherever they occur, the words “an international transaction or a specified domestic transaction” shall be substituted;

(ii)

 for the words “the international transaction”, wherever they occur, the words “the international transaction or the specified domestic transaction” shall be substituted;

(iii)

 for the words “international transactions”, wherever they occur, the words “international transactions or specified domestic transactions” shall be substituted;

(iv)

 in sub-rule (1), in clause (d), in the proviso, for the words “type of international transaction”, the words “type of international transaction or specified domestic transaction” shall be substituted.

5. In rule 10C of the principal rules, –

(i)

 in sub-rule (1),- 

(a)

 for the words “particular international transaction”, the words “particular international transaction or specified domestic transaction” shall be substituted;

(b)

 after the words “in relation to the international transaction”, the words “or the specified domestic transaction, as the case may be” shall be inserted.

(ii)

 in sub-rule (2), for the words “the international transaction”, wherever they occur, the words “the international transaction or the specified domestic transaction” shall be substituted.

6. In rule 10D of the principal rules, –

(i)

 for the words “the international transaction”, wherever they occur, the words “the international transaction or the specified domestic transaction” shall be substituted; 

(ii)

 for the words “an international transaction”, wherever they occur, the words “an international transaction or a specified domestic transaction” shall be substituted; 

(iii)

 in sub-rule (1),- 

(a)

 in clause (b), after the words “with whom international transactions”, the words “or specified domestic transactions, as the case may be,” shall be inserted; 

(b)

 in clause (d), after the words “international transactions”, the words “or specified domestic transactions” shall be inserted; 

(c)

 in clause (f), after the words “the international transactions”, the words “or the specified domestic transactions” shall be inserted; 

(d)

 in clause (g),- 

(I)

 after the words “comparability with the international transactions”, the words “or the specified domestic transactions” shall be inserted;

(II)

 after the words “pricing of the international transactions” occurring at the end, the words “or specified domestic transactions, as the case may be” shall be inserted.

(e)

 in clauses (h) and (i),for the words “international transaction”, the words “international transaction or specified domestic transaction” shall respectively be substituted; 

(iv)

 in sub-rule (2), for the words, brackets and figure “Nothing contained in sub-rule (1) shall”, the words, brackets and figure “Nothing contained in sub-rule (1), insofar as it relates to an international transaction, shall” shall be substituted; 

(v)

 in sub-rule (3), in clause (e), after the words “international transactions”, the words “or the specified domestic transactions, as the case may be” shall be inserted; 

(vi)

 in sub-rule(4), in the proviso, after the words “terms of the international transaction”, the words “or the specified domestic transaction, as the case may be” shall be inserted. 

7. In rule 10E of the principal rules, after the words “international transaction”, the words “or a specified domestic transaction” shall be inserted;

8. In Appendix-II of the principal rules, for Form No.3 CEB, the following Form shall be substituted, namely: –

Reference: Section 92 of the income Tax Act, 1961

Computation of arm’s length price. 

(1) The arm’s length price in relation to an international transaction  [or specified domestic transaction] shall be determined by any of the following methods, being the most appropriate method, having regard to the nature of transaction or class of transaction or class of associated persons or functions performed by such persons or such other relevant factors as the Board may prescribe namely :—

(a)  comparable uncontrolled price method;

(b)  resale price method;

(c)  cost plus method;

(d)  profit split method;

(e)  transactional net margin method;

(f)  such other method as may be prescribed by the Board.

(2) The most appropriate method referred to in sub-section (1) shall be applied, for determination of arm’s length price, in the manner as may be prescribed:

[Provided that where more than one price is determined by the most appropriate method, the arm’s length price shall be taken to be the arithmetical mean of such prices:

Provided further that if the variation between the arm’s length price so determined and price at which the international transaction  [or specified domestic transaction] has actually been undertaken does not exceed  [such percentage [not exceeding three per cent] of the latter, as may be notifiedby the Central Government in the Official Gazette in this behalf], the price at which the international transaction  [or specified domestic transaction] has actually been undertaken shall be deemed to be the arm’s length price.]

[Explanation.—For the removal of doubts, it is hereby clarified that the provisions of the second proviso shall also be applicable to all assessment or reassessment proceedings pending before an Assessing Officer as on the 1st day of October, 2009.]

[(2A) Where the first proviso to sub-section (2) as it stood before its amendment by the Finance (No. 2) Act, 2009 (33 of 2009), is applicable in respect of an international transaction for an assessment year and the variation between the arithmetical mean referred to in the said proviso and the price at which such transaction has actually been undertaken exceeds five per cent of the arithmetical mean, then, the assessee shall not be entitled to exercise the option as referred to in the said proviso.]

[(2B) Nothing contained in sub-section (2A) shall empower the Assessing Officer either to assess or reassess under section 147 or pass an order enhancing the assessment or reducing a refund already made or otherwise increasing the liability of the assessee under section 154 for any assessment year the proceedings of which have been completed before the 1st day of October, 2009.]

(3) Where during the course of any proceeding for the assessment of income, the Assessing Officer is, on the basis of material or information or document in his possession, of the opinion that—

(a)  the price charged or paid in an international transaction [or specified domestic transaction] has not been determined in accordance with sub-sections (1) and (2); or

(b)  any information and document relating to an international transaction  [or specified domestic transaction] have not been kept and maintained by the assessee in accordance with the provisions contained in sub-section (1) of section 92D and the rules made in this behalf; or

(c)  the information or data used in computation of the arm’s length price is not reliable or correct; or

(d)  the assessee has failed to furnish, within the specified time, any information or document which he was required to furnish by a notice issued under sub-section (3) of section 92D,

the Assessing Officer may proceed to determine the arm’s length price in relation to the said international transaction  [or specified domestic transaction] in accordance with sub-sections (1) and (2), on the basis of such material or information or document available with him:

Provided that an opportunity shall be given by the Assessing Officer by serving a notice calling upon the assessee to show cause, on a date and time to be specified in the notice, why the arm’s length price should not be so determined on the basis of material or information or document in the possession of the Assessing Officer.

(4) Where an arm’s length price is determined by the Assessing Officer under sub-section (3), the Assessing Officer may compute the total income of the assessee having regard to the arm’s length price so determined :

Provided that no deduction under section 10A [or section 10AA] or section 10B or under Chapter VI-A shall be allowed in respect of the amount of income by which the total income of the assessee is enhanced after computation of income under this sub-section :

Provided further that where the total income of an associated enterprise is computed under this sub-section on determination of the arm’s length price paid to another associated enterprise from which tax has been deducted  [or was deductible] under the provisions of Chapter XVIIB, the income of the other associated enterprise shall not be recomputed by reason of such determination of arm’s length price in the case of the first mentioned enterprise.

 

 

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