On 20 June 2018, the Central Board of Direct Taxes (CBDT) has announced the publication of a draft notification for amendment in Rule 10CB of the Income-tax Rules, 1962 in respect of computation of interest income pursuant to secondary adjustment made under section 92CE.
The CBDT on 15 June 2017 issued new rules for transfer pricing secondary adjustments. These rules are designed to attribute income to the excess money in the hands of an associated enterprise following a primary transfer pricing adjustment and also require an actual allocation of funds consistent with that adjustment. Under the 2017 rules, a time limit of 90 days was set for repatriation of excess money, which begins when the primary adjustments attains finality. These rules established that if the primary adjustment was made as a consequence of an APA, the 90-day period would begin from the date of filing of the return. If the primary adjustment was a consequence of the MAP, the 90 days is reckoned from the income tax return due date.
The new draft notification would amend the basis for the 90-day deadline in relation to adjustments resulting from advance pricing agreements (APA) and mutual agreement procedures (MAP) to provide that instead of basing the deadline on the return filing due date, the 90-day period begins from the date the assesse enters into the APA or the date the MAP resolution is given effect.
Comments and suggestions on the draft rules are due by 9 July 2018.
