CBDT notifies Rule for computation of tax relief on Book Profits increased due to APA/Secondary Adjustments

Notification No. 92/2021, dated 10-08-2021

To provide relief to the taxpayers affected due to the outcome of the Advance Pricing Agreement (APA) and Secondary Adjustment, the Finance Act, 2021 has inserted a new sub-section (2D) to Section 115JB. As per the provisions, the Assessing Officer, on an application by the assessee, shall re-compute the book profit of the past years and tax payable thereon if assessee’s current year’s income has increased due to APA under section 92CC or secondary adjustment under section 92CE.

It is also provided that the Central Board of Direct Taxes (CBDT) may notify the manner for re-computing the book profits of past years. Now the CBDT has notified new Rule 10RB to the Income-tax Rules, 1962 prescribing manner for computation of relief in tax payable under section 115JB(1) due to operation of newly inserted sub-section (2D) of section 115JB.
Rule 10RB provides that the tax payable, by the assessee as per MAT provisions, for the relevant previous year, shall be reduced by the following amount:

(A-B) – (D-C)

Where;

A = tax payable by the assessee on the book profit of the previous year including the past income;

B = tax payable by the assessee on the book profit of the previous year after reducing the book profit with the past income;

C = Aggregate of tax payable by the assessee on the book profit of those past year or years to which the past income belongs;

D = Aggregate of tax payable by the assessee on the book profit of past year or years, referred to in item C, after increasing the book profit with the relevant past income of such year or years

if the value of (A-B)-(D-C) in the formula is negative, its value shall be deemed to be zero.
Assessee is required to make an application in Form 3CEEA electronically to claim relief under section 115JB(2D). The tax credit allowed to the assessee under section 115JAA shall be reduced by the amount which is equal to the amount of reduction that has been allowed under this rule.

Read the Full Circular Here