Form 49: Application for safe-harbour treatment

90. Procedure relating to transactions other than provision of information technology services. — (1) For the purposes of exercise of the option for safe harbour, — (a) the assessee shall furnish Form No. 49, complete in all respects, to the Assessing Officer on or before the due date specified in section 263(1)(c) for furnishing the return of income for the rele vant tax year; and (b) the return of income for the said tax year is furnished by the assessee on or before the date of furnishing of Form No. 49. (2) On receipt of Form No. 49, the Assessing Officer shall verify whether— (a) the assessee exercising the option is an eligible assessee; and (b) the transaction in respect of which the option is exercised is an eligible international transaction, before the option for safe harbour by the assessee is treated to be validly exercised. (3) Where the Assessing Officer doubts the valid exercise of the option for the safe harbour by an assessee, he shall make a reference to the Transfer Pricing Officer for determination of the eligibility of the assessee or the international transaction, or both, for the purposes of the safe harbour. (4) For the purposes of sub -rule (3), the Transfer Pricing Officer may require the assessee, by notice in writing, to furnish such information or documents or other evidence as he may consider necessary, and the assessee shall furnis h the same within the time specified in such notice. (5) Where — (a) the assessee does not furnish the information or documents or other evidence required by the Transfer Pricing Officer; or (b) the Transfer Pricing Officer finds that the assessee is not an eligible assessee; or (c) the Transfer Pricing Officer finds that the international transaction in respect of which the option referred to in sub-rule (1) has been exercised is not an eligible international transaction, the Transfer Pricing Officer shall, by order in writing, declare the option exercised by the assessee under sub -rule (1) to be invalid, after giving a reasonable opportunity of being heard to the assessee, and cause a copy of the said order to be served on the assessee and the Assessing Officer. (6) If the assessee objects to the order of the Transfer Pricing Officer under sub -rule (5) declaring the option to be invalid, he may file his objections with the Commissioner, to whom the Transfer Pricing Officer is subordinate, within fifteen days of receipt of the order of the Transfer Pricing Officer. (7) On receipt of the objection referred to in sub -rule (6), the Commissioner shall after providing a reasonable opportunity of being heard to the assessee, pass appropriate orders in respect of the validity, or otherwise of the option exercised by the assessee and cause a copy of the said order to be served on the assessee and the Assessing Officer. (8) In a case, where option exercised by the assessee has been held to be valid, the Assessin g Officer shall proceed to verify whether the transfer price declared by the assessee in respect of the relevant eligible international transactions is in accordance with the circumstances specified in rule 89(2) and, if it is not in accordance with the sa id circumstances, the Assessing Officer shall adopt the operating profit margin or rate of interest or commission specified in the said rule. (9) For the purposes of this rule, — [PDF PAGE 81] [भाग II—खण्‍ ड 3(i)] भारत‍का‍राजपत्र‍:‍असाधारण 1613 (i) no reference under sub -rule (3) shall be made by an Assessing Officer after expiry of a period of two months from the end of the month in which Form No.49 is received by him; (ii) no order under sub-rule (5) shall be passed by the Transfer Pricing Officer after expiry of a period of two months from the end of the month in w hich the reference from the Assessing Officer under sub -rule (3) is received by him; and (iii) the order under sub -rule (7) shall be passed by the Commissioner within a period of two months from the end of the month in which the objection filed by the assessee under sub-rule (6) is received by him. (10) If the Assessing Officer or the Transfer Pricing Officer or the Commissioner, as the case may be, does not make a reference or pass an order, within the time specified in sub -rule (9), then the option for safe harbour exercised by the assessee shall be treated as valid. (11) Form No. 49 shall be furnished electronically either under digital signature or through electronic verification code and shall be verified by the person who is authorised to verify th e return of income of the assessee under section 265. (12) The Assessing Officer may make a reference under section 166 in respect of international transaction other than the eligible international transaction.

91. Procedure relating to transactions of p rovision of information technology services. — (1) Where option for safe harbour is exercised in respect of eligible international transaction being provision of information technology services, such option for safe harbour, once exercised validly, shall co ntinue to remain in force for a period of five consecutive tax years. (2) For the purposes of safe harbour in respect of eligible international transaction referred to in sub -rule (1), the threshold of two thousand crore rupees of the aggregate operating revenue shall be tested for the first of the five consecutive tax years. (3) For exercising option for safe harbour, the assessee shall furnish Form No. 49, complete in all respects, to the Director General of Income -tax (Systems) for the first of the fiv e consecutive tax years for which option for safe harbour is proposed to be exercised on or before the due date of furnishing of return of income, as specified in section 263(1)(c), for the aforesaid first tax year. (4) After furnishing of Form No. 49, verification in respect of the following shall be done electronically: — (a) the assessee exercising the option is an eligible assessee; (b) the transaction in respect of which the option is exercised is an eligible international transaction; and (c) the exercise of option is valid. (5) After verification, the assessee shall be intimated within a period of two months from the end of the month in which the option for safe harbour is exercised, about the acceptance or the rejection of the option exercised, as the case may be. (6) The option for exercise of safe harbour shall not be rejected unless the assessee is provided an opportunity to remove defects, if any, in the application filed. (7) Where an option for safe harbour is rejected electronically, the assessee shall be provided reasons for the same. (8) Where an option for safe harbour is accepted, the assessee shall furnish return of income in accordance with the safe harbour provis ions for each of the five consecutive tax years on or before the due date specified in section 263(1)(c). (9) The option shall not remain in force in respect of any tax year, if the assessee withdraws the option for safe harbour, by furnishing a declaration to that effect. [PDF PAGE 82] 1614 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(i)] (10) The withdrawal of option referred to in sub-rule (9) shall not be made after the expiry of six months from the end of the first tax year. (11) Where the assessee withdraws the option for safe harbour by furnishing a declaration referred to in sub -rule (9) the option shall not remain in force for tax year for which assessee has withdrawn the option and for subsequent tax years. (12) Where an assessee withdraws the option for safe harbour, he shall not be eligible to again exerci se the option for safe harbour upto the period of expiry of five consecutive tax years referred to in sub -rule (1). (13) The assessee shall, in respect of each of the four consecutive tax years following the first tax year, furnish a statement on or befo re the due date of furnishing return of income of that tax year as specified in section 263(1)(c), providing details of eligible transactions, their quantum and profit margins. (14) The Assessing Officer may make a reference under section 166 in respect o f international transaction other than the eligible international transaction. (15) Form No. 49 shall be furnished electronically either under digital signature or through electronic verification code. (16) Form No. 49 shall be certified by the chief exe cutive officer or chairman and managing director of the assessee and verified by the person who is authorised to verify the return of income of the assessee under section 265. (17) The Director General of Income-tax (Systems) shall, with the approval of t he Board, lay down the data structure, standards, format and procedure of furnishing and verification of such Forms, statements, order, declaration, including any modification, if required.

98. Procedure governing safe harbour rules for specified domestic transactions. — (1) For the purposes of exercising of the option for safe harbour, — (a) the assessee shall furnish Form No. 49, complete in all respects, to the Assessing Officer on or before the due date specified in section 263(1)(c) for furnishing the return of income for the relevant tax year; and (b) the return of income for the relevant tax year is to be furnished by the assessee on or before the date of furnishing of Form No. 49. (2) On receipt of Form No. 49, the Assessing Officer shall verify whether— [PDF PAGE 84] 1616 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(i)] (a) the assessee exercising the option is an eligible assessee; and (b) the transaction in respect of which the option is exercised is an eligible specified domestic transaction, before the option for safe harbour by the assessee is treated to be validly exercised. (3) Where the Assessing Officer doubts the valid exercise of the option for the safe harbour by an assessee, he may require the assessee, by notice in writing, to furnish such information or documents or other evidence as he may consider necessary, and the assessee shall furnish the same within the time specified in such notice. (4) Where — (a) the assessee does not furnish the information or documents or other evidence required by the Assessing Officer; or (b) the Assessing Officer finds that the assessee is not an eligible assessee; or (c) the Assessing Officer finds that the specified domestic transaction in respect of which the option referred to under sub-rule (1) has been exercised is not an eligible specified domestic transaction; or (d) the tariff is not in accordance with the circumstances specified under rule 97, the Assessing Officer shall, by order in writing, declare the option exercised by the assessee under sub -rule (1) to be invalid, after giving a reasonable opportunity of being heard to the assessee, and cause a copy of the said order to be served on the assessee. (5) If the assessee objects to the order of the Assessing Officer under sub -rule (4) declaring the option to be invalid, he may file his objections with the Principal Commissioner or the Commissioner, as the case may be, to whom the Assessing Officer is subordinate, within fifteen days of receipt of the order of the Assessing Officer. (6) On receipt of the objection referred to in sub -rule (5), the Principal Commissioner or the Commissioner, as the case may be, shall after providing a reasonable opportunity of being heard to the assessee, pass appropriate orders in respect of the v alidity or otherwise of the option exercised by the assessee and cause a copy of the said order to be served on the assessee and the Assessing Officer. (7) For the purposes of this rule, — (a) no order under sub -rule (4) shall be made by an Assessing Offi cer after expiry of a period of three months from the end of the month in which Form No. 49 is received by him; and (b) the order under sub-rule (6) shall be passed by the Principal Commissioner or Commissioner, as the case may be, within a period of two months from the end of the month in which the objection filed by the assessee under sub-rule (5) is received by him. (8) If the Assessing Officer or the Principal Commissioner or the Commissioner, as the case may be, does not pass an order within the tim e specified under sub -rule (7), then the option for safe harbour exercised by the assessee shall be treated as valid. (9) Form No. 49 shall be furnished electronically either under digital signature or through electronic verification code and shall be verified by the person who is authorised to verify the return of income of the assessee under section 265. (10) The Assessing Officer may make a reference under section 166 in respect of specified domestic transaction other than the eligible specified domestic transaction.

101. Procedure governing safe harbour rules for income attribution in case of income from business and profession.— (1) For exercising option for safe harbour, the assessee shall furnish Form No. 49, complete in all respects, to the Assessing Officer before furnishing the return of income under section 263 for the relevant tax year. [PDF PAGE 87] [भाग II—खण्‍ ड 3(i)] भारत‍का‍राजपत्र‍:‍असाधारण 1619 (2) The income from eligible business shall be determined in accordance with the provisions of the Act without having regard to the provisions of rule 100(2), where the assessee does not exercise option for safe harbour under rule 100(1). (3) The Assessing Officer may declare the option for safe harbour as invalid by an order in writing, where the assessee has— (a) availed the safe harbour by furnishing incorrect facts; or (b) concealed facts related to his business. (4) The Assessing Offic er shall afford a reasonable opportunity of being heard to the assessee before declaring the option for safe harbour invalid under sub-rule (3). (5) The Assessing Officer shall serve a copy of the order referred to under sub -rule (3) to the assessee and t he other provisions of the Act shall apply accordingly. (6) Form No. 49 shall be furnished electronically either under digital signature or through electronic verification code and shall be verified by the person who is authorised to verify the return of income of the assessee under section 265.