A number of references have been received from time to time regarding the acceptance of applications pertaining to Transfer Pricing MAP cases and Bilateral Advance Pricing Agreements (APAs) where the Associated Enterprise (AE) of the Indian entity is resident of a country with which India has entered into a Double Taxation Avoidance Agreement (DTAA) but the Agreement does not contain Paragraph 2 of Article 9 (or its relevant equivalent Article) relating to ‘Corresponding Adjustment’.

The matter has been examined by the Central Board of Direct Taxes (CBDT) and it has been decided to accept Transfer Pricing MAP and bilateral APA applications regardless of the presence or otherwise of Paragraph 2 of Article 9 (or its relevant equivalent Article) in the DTAAs.

Mutual Agreement Procedure acceptance expanded: transfer pricing MAPs and bilateral APAs accepted irrespective of corresponding adjustment clause. Acceptance of applications for transfer pricing Mutual Agreement Procedure and bilateral Advance Pricing Agreements is confirmed even where the relevant Double Taxation Avoidance Agreement lacks a Corresponding Adjustment clause; absence of Paragraph 2 of Article 9 (or equivalent) in the DTAA does not bar initiation or acceptance of MAP or bilateral APA proceedings.