The Central Board of Direct Taxes (CBDT) has laid down fresh rules to amend the Income-tax Rules, 1962. The board notified Income-tax (8th Amendment) Rules, 2020.
The Income Tax (8th Amendment) Rules, 2020, notified on Wednesday, specify the format of FORM NO. 34F for an assessee, resident in India, seeking to invoke mutual agreement procedure provided for in agreements with other countries or specified territories.
Rule 44G is substituted in the Income-tax Rules, 1962, which specified, “Application seeking to give effect to the terms of any agreement under clause (h) of sub-section (2) of section 295 and the procedure for giving effect to the decision under the Agreement. Where an assessee, being a resident of India, is aggrieved by any action of the tax authorities of any country or specified territory outside India for the reason that, according to him, such action is not in accordance with the terms of agreement with such other country or specified territory, he may make an application to the Competent Authority in India seeking to invoke the mutual agreement procedure, if provided in such agreement, in Form No. 34F.”
As per the rule, “where a reference has been received from the competent authority of any country or specified territory outside India under any agreement with that country or specified territory with regard to any action taken by any income-tax authority in India or by the tax authorities of such country or specified territory, the Competent Authority in India shall convey his acceptance or otherwise for taking up the reference under mutual agreement procedure to the competent authority of the other country or specified territory.”
“The Competent Authority in India shall endeavor to arrive at a mutually agreeable resolution of the tax disputes, arising from such actions of the income-tax authorities, in accordance with the agreement between India and the other country or specified territory within an average time period of twenty-four months,” the notification said.
As per the rules “in case the mutual agreement procedure is invoked on account of action taken by any income-tax authority in India, the resolution arrived at under sub-rule (4) in a previous year shall not result in decreasing the income or increasing the loss, as the case may be, of the assessee in India, as declared by him in the return of income of the said year.”
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