Rule 109 - Procedure for advance pricing agreement

Procedure. 109. (1) If the application referred to in rule 108 has been allowed to be proceeded with, the team or the competent authority of India, or his representative, shall process the same in consultation and discussion with the applicant in accordance with provisions of this rule. (2) For the purposes of sub-rule (1), the team, or the competent authority of India, or its representative may— (a) hold meetings with the applicant on such time and date as it deems fit; or (b) call for additional document or information or material from the applicant; or (c) visit the applicant's business premises; or (d) make such inquiries as it deems fit in the circumstances of the case. (3) In the case of a unilateral agreement, the proceedings referred to in sub-rule (2) may, where it is possible, be completed within a period of one year from the end of the financial year in which the application referred to in rule 108 has been allowed to be proceeded with. (4) For the purpose of sub-rule (1), the applicant may provide further document and information for consideration of the team, or the competent authority of India, or his representative. (5) For a bilateral or multilateral agreement, the competent authority shall forward the application to the Principal Chief Commissioner of Income-tax (International Taxation), who shall assign it to one of the teams. (6) The team, to whom the application has been assigned under sub-rule (4), shall carry out the enquiry and prepare a draft report which shall be forwarded by the Principal Chief Commissioner of Income-tax (International Taxation) to the competent authority of India. (7) If the applicant makes a request for bilateral or multilateral agreement in the application, the competent authority of India shall, in addition to the procedure provided in this rule, invoke the procedure provided in rule 122. (8) The Principal Chief Commissioner of Income-tax (International Taxation) (for unilateral agreement) or the competent authority of India (for bilateral or multilateral agreement) and the applicant shall prepare a proposed mutually agreed draft agreement enumerating the result of the process referred to in sub-rule (1), including the effect of the arrangement referred to in rule 122(5) which has been accepted by the applicant in accordance with rule 122(8). (9) The agreement shall be entered into by the Board with the applicant after its approval by the Central Government. (10) Once an agreement has been entered into, the Principal Chief Commissioner of Income-tax (International Taxation) or the competent authority of India, as the case may be, shall cause a copy of the agreement to be sent to the Commissioner of Income-tax having jurisdiction over the assessee. (11) Where no agreement has been entered within a period of three years from the end of the financial year in which the application referred to in rule 108 is furnished, then the Board may direct that the proceedings in respect of such an application shall be treated as closed, if— (a) the applicant has not provided any document or information or material relevant, as required under sub-rule (2)(ii), for proceeding with the application; or (b) the applicant fails to comply with any direction issued for holding a meeting, facilitating the visit of premises, or making of inquiries in terms of sub-rule (2). (12) The directions under sub-rule (11) shall be given after providing a reasonable opportunity of being heard to the applicant. (13) Where an application is made for a unilateral advance pricing agreement where the primary covered transaction is the provision of information technology services referred to in rule 89(2) [Table: Sl. No. 1] and the agreement is not entered into within a period of two years from the end of the quarter in which the application is made, the proceedings in respect of such an application shall be treated as closed. (14) For the purposes of sub-rule (13), the assessee may request for an additional period of six months beyond the time limit mentioned therein and, in such case, the aforesaid time limit shall be extended by an additional period of six months. (15) Where the proceedings are closed, the fee paid by the applicant under rule 106 shall not be refunded.