The existing provisions of section 92CC empowers the Board to enter into an advance pricing agreement, with the approval of the Central Government, with any person for determining arm’s length price or specifying the manner in which arm’s length price is to be determined in relation to an international transaction which is to be entered into by such person. The agreement entered into is valid for a period, not exceeding five previous years, as may be mentioned in the agreement. Once the advance pricing agreement is entered into, the arm’s length price of the international transaction, which is the subject matter of the same, is determined in accordance with such agreement. Sub-section (9) of the said section empowers the Board to prescribe the scheme specifying therein the manner, form, procedure and any other matter generally in respect of advance pricing agreement.
It is proposed to insert a new sub-section (9A) in section 92CC to provide that an advance pricing agreement may, subject to such conditions, procedure and manner as may be prescribed, provide for determining the arm’s length price or specify the manner in which arm’s length price shall be determined in relation to an international transaction entered into by the person during any period not exceeding four previous years preceding the first of the previous year for which the agreement applies in case of future transactions. It is further provided that where such agreement provides for determination in respect of past transactions, the arm’s length price of such transactions shall be determined in accordance with the agreement. This amendment will take effect from 1st October, 2014