NEW DELHI, JUNE 20, 2018: TO make the actual allocation of funds consistent with that of the primary adjustment, section 92CE was inserted in the Income-tax Act, 1961 vide Finance Act, 2017 with effect from April 01, 2018, to provide for secondary adjustment by attributing income to the excess money lying in the hands of the associated enterprise (AE).

The time within which the excess money, which is available with the associated enterprise of an assessee as a result of primary adjustment to the transfer price, which leads to an increase in the total income or reduction in the loss of the assessee, shall be repatriated to India, was prescribed in accordance with the provisions of Section 92CE(2) by inserting Rule 10CB of the Income-tax Rules, 1962 vide Notification No. GSR 590(E) dated June 15, 2017.

Under Rule 10CB(1), a uniform time limit of 90 days, starting from different dates, is prescribed for repatriation of excess money. This is done in order to provide for uniform treatment in respect of the different types/situations of primary adjustments specified under sub-section (1) of section 92CE.

Certain difficulties have been noted in implementing the provisions of Rule 10CB(1) in respect of primary adjustment that arises on account of Agreement for Advance Pricing (APA) entered into by the assessee, or on account of an agreement reached under the Mutual Agreement Procedure (MAP). In order to remove these difficulties, it is proposed to amend Rule 10CB.

In this regard, draft notification providing for said modification has been made public and the CBDT has invited comments latest by July 9, 2018. The comments may be emailed at ustpl3@nic.in.

See Draft Notification