Chapter No. 12 - Board With The Approval Of Central Government Allowed To Enter Into Advance Price Agreement

For the assessment year 2015-16 A ltd. submits return of income on November 10,2015. On November 18, 2015, it enters into an advance pricing agreement (APA) with the Board pertaining to determination of arm’s length price in connection with import of semi-finished goods from its holding company situated in the Switzerland. The agreement provides ALP for the transactions pertaining to the assessment years 2014-15 and 2015-16. The assessment of 2014-15 has already been completed but the assessment for 2015-16 is pending on the date of entering into APA.

In this case, A ltd. will have to submit a modified return for the assessment year 2014-15 (and also for the assessment year 2015-16) on or before February 28, 2016 (i.e., within 3 months from the end of the month in which APA is made).

On February 28, 2016, the assessment for the assessment year 2014-15 has already been completed. For the assessment year 2014-15, the Assessing Officer will reassess the income keeping in view the provisions of APA. This assessment can be completed on or before March 31, 2017 (i.e., within 1 year from the end of the financial year in which modified return is submitted).

On February 28, 2016,  the assessment for the assessment year 2015-16 is pending. Normally, the assessment for the assessment year 2015-16 should be completed before April 1, 2018. In this case, the Assessing Officer can complete the assessment for the assessment  year  2015-16 (keeping in view the provisions of APA) at any time before April 1, 2019.