Transfer Pricing – Audit Report Format for international & specified domestic transactions with additional disclosures

The CBDT has notified vide Notification No. 41 dated 10 June 2013,  new Form 3CEB which includes reporting on specified domestic transactions. The said notification also amends Rule 10A, 10AB, 10B, 10C, 10D and 10E.

Following are the additional international transactions required to be reported in new Form 3CEB:

•  International transaction(s) in the nature of guarantee
• Purchase or sale of marketable securities, issue and buyback if equity shares, optionally convertible  debentures/preference shares
• transactions arising out of business restructuring or reorganization
• Transactions having a bearing on the profit, income, losses or assets 
• Deemed international transactions

RELEVANT NOTIFICATION IS AS FOLLOWS :-

Notification No. 41/2013 , Dated-  10^th June, 2013

INCOME-TAX

S.O 1491 (E)- In exercise of the powers conferred by sub-sections (1) and (2) of section 92C, section 92D and section 92E read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-

1. (1). These rules may be called the Income-tax (Sixth Amendment) Rules, 2013.

   (2). They shall be deemed to have come into force with effect from the 1st day of April, 2013.

2. In rule 10A of the Income-tax Rules, 1962 (hereafter referred to as the principal rules), -

(i) for the figures and letter “10B”, the figures and letters “10AB” shall be substituted;

(ii) the clause (a) shall be renumbered as clause (ab) and before the clause as so renumbered, the following clauses shall be inserted, namely: -

‘(a) “associated enterprise” shall,-

(i) have the same meaning as assigned to it in section 92A; and

(ii) in relation to a specified domestic transaction entered into by an assessee, include —

(A) the persons referred to in clause (b) of sub-section (2) of section 40A in respect of a transaction referred to in clause (a) of sub-section (2) of the said section;

(B) other units or undertakings or businesses of such assessee in respect of a transaction referred to in section 80A or, as the case may be, subsection (8) of section 80-IA;

(C) any other person referred to in sub-section (10) of section 80-IA in respect of a transaction referred to therein;

(D) other units, undertakings, enterprises or business of such assessee, or other person referred to in sub-section (10) of section 80-IA, as the case may be, in respect of a transaction referred to in section 10AA or the transactions referred to in Chapter VI-A to which the provisions of sub-section (8) or, as the case may be, the provisions of sub-section (10) of section 80-IA are applicable;

(aa) “enterprise” shall have the same meaning as assigned to it in clause (iii) of section 92F and shall, for the purposes of a specified domestic transaction, include a unit, or an enterprise, or an undertaking or a business of a person who undertakes such transaction;’.

3. In rule 10AB of the principal rules, after the words “international transaction”, the words “or a specified domestic transaction” shall be inserted.

4. In rule 10B of the principal rules, -

(i) for the words “an international transaction”, wherever they occur, the words “an international transaction or a specified domestic transaction” shall be substituted;

(ii) for the words “the international transaction”, wherever they occur, the words “the international transaction or the specified domestic transaction” shall be substituted;

(iii) for the words “international transactions”, wherever they occur, the words “international transactions or specified domestic transactions” shall be substituted;

(iv) in sub-rule (1), in clause (d), in the proviso, for the words “type of international transaction”, the words “type of international transaction or specified domestic transaction” shall be substituted.

5. In rule 10C of the principal rules, -

(i) in sub-rule (1),-

(a) for the words “particular international transaction”, the words “particular international transaction or specified domestic transaction” shall be substituted;

(b) after the words “in relation to the international transaction”, the words “or the specified domestic transaction, as the case may be” shall be inserted.

(ii) in sub-rule (2), for the words “the international transaction”, wherever they occur, the words “the international transaction or the specified domestic transaction” shall be substituted.

6. In rule 10D of the principal rules, -

(i) for the words “the international transaction”, wherever they occur, the words “the international transaction or the specified domestic transaction” shall be substituted;

(ii) for the words “an international transaction”, wherever they occur, the words “an international transaction or a specified domestic transaction” shall be substituted;

(iii) in sub-rule (1),-

(a) in clause (b), after the words “with whom international transactions”, the words “or specified domestic transactions, as the case may be,” shall be inserted;

(b) in clause (d), after the words “international transactions”, the words “or specified domestic transactions” shall be inserted;

(c) in clause (f), after the words “ the international transactions”, the words “or the specified domestic transactions” shall be inserted;

(d) in clause (g),−

(I) after the words “comparability with the international transactions”, the words “or the specified domestic transactions” shall be inserted;

(II) after the words “pricing of the international transactions” occurring at the end, the words “or specified domestic transactions, as the case may be” shall be inserted;

(e) in clauses (h) and (i),for the words “international transaction”, the words “international transaction or specified domestic transaction” shall respectively be substituted;

(iv) in sub-rule (2), for the words, brackets and figure “Nothing contained in subrule (1) shall”, the words, brackets and figure “Nothing contained in sub-rule (1), in so far as it relates to an international transaction, shall” shall be substituted;

(v) in sub-rule (3), in clause (e), after the words “international transactions”, the words “or the specified domestic transactions, as the case may be” shall be inserted;

(vi) in sub-rule(4), in the proviso, after the words “terms of the international transaction”, the words “or the specified domestic transaction, as the case may be” shall be inserted.

7. In rule 10E of the principal rules, after the words “international transaction”, the words “ or a specified domestic transaction” shall be inserted;

8. In Appendix-II of the principal rules, for Form No.3 CEB, the following Form shall be substituted, namely: -

“FORM NO. 3CEB

[See rule 10E]

Report from an accountant to be furnished under section 92E relating to international transaction(s) and specified domestic transaction(s)

1. *I/We have examined the accounts and records of ______________________________________ (name and address of the assessee with PAN) relating to the international transaction (s) and the specified domestic transaction(s) entered into by the assessee during the previous year ending on 31st March, ._______________

2. In*my/our opinion proper information and documents as are prescribed have been kept by the assessee in respect of the international transaction(s) and the specified domestic transactions entered into so far as appears from *my/our examination of the records of the assessee.

3. The particulars required to be furnished under section 92E are given in the Annexure to this Form. In*my/our opinion and to the best of my/our information and according to the explanations given to *me/us, the particulars given in the Annexure are true and correct.

**Signed

: Name

Address :

Membership No. :

Place : ____________
Date : ___________
Notes :
1. *Delete whichever is not applicable.
2. **This report has to be signed by—
(i) a chartered accountant within the meaning of the Chartered Accountants Act, 1949 (38 of 1949); or
(ii) any person who, in relation to any State, is, by virtue of the provisions in sub-section (2) of section 226 of the Companies Act, 1956 (1 of 1956), entitled to be appointed to act as an auditor of companies registered in that State.

ANNEXURE TO FORM NO. 3CEB

Particulars relating to international transactions and specified domestic transactions required to be furnished under section 92E of the Income-tax Act, 1961

PART A

1. Name of the assessee
2. Address
3. Permanent account number
4. Nature of business or activities of the assessee*
5. Status
6. Previous year ended
7. Assessment year
8. Aggregate value of international transactions as per books of accounts
9. Aggregate value of specified domestic transactions as per books of accounts
* Code for nature of business to be filled in as per instructions for filling Form ITR 6

PART B (International Transactions)

10.	List of associated enterprises with whom the ssessee has entered into international transactions, with the following details : (a) Name of the associated enterprise. (b) Nature of the relationship with the associated enterprise as referred to in section 92A(2). (c) Brief description of the business carried on by the associated Enterprise
11.	Particulars in respect of transactions in tangible property. A. Has the assessee entered into any international transaction(s) in respect of purchase/sale of raw material, consumables or any other supplies for assembling or processing/manufacturing of goods or articles from/to associated enterprises? If ‘yes’, provide the following details in respect of each associated enterprise and each transaction or class of transaction : (a) Name and address of the associated enterprise with whom the international transaction has been entered into. (b) Description of transaction and quantity purchased/sold. (c) Total amount paid/received or payable/receivable in the transaction— (i) as per books of account; (ii) as computed by the assessee having regard to the arm’s length price. (d) Method used for determining the arm’s length price [See section 92C(1)] B. Has the assessee entered into any international transaction(s) in respect of purchase/sale of traded/finished goods? If ‘yes’ provide the following details in respect of each associated enterprise and each transaction or class of transaction : (a) Name and address of the associated enterprise with whom the international transaction has been entered into. (b) Description of transaction and quantity purchased/sold. (c) Total amount paid/ received or payable/ receivable in the transaction (i) as per books of accounts; (ii) as computed by the assessee having regard to the arm’s length price. (d) Method used for determining the arm’s length price [See section 92C(1)] C. Has the assessee entered into any international transaction(s) in respect of purchase, sale, transfer, lease or use of any other tangible property including transactions specified in Explanation (i)(a) below section 92B(2)? If ‘yes’ provide the following details in respect of each associated enterprise and each transaction or class of transaction: (a) Name and address of the associate enterprise with whom the international transaction has been entered into. (b) Description of the property and nature of transaction. (c) Number of units of each category of tangible property involved in the transaction. (d) Amount paid/received or payable/receivable in each transaction of purchase/sale/transfer /use, or lease rent paid/received or payable/receivable in respect of each lease provided/entered into — (i) as per books of account; (ii) as computed by the assessee having regard to the arm’s length price. (e) Method used for determining the arm’s length price [See section 92C(1)]	Yes/No Yes/No Yes/No
12.	Particulars in respect of transactions in intangible property : Has the assessee entered into any international transaction(s) in respect of purchase, sale, transfer, lease or use of intangible property including transactions specified in Explanation (i)(b) below section 92B(2)? If ‘yes’ provide the following details in respect of each associated enterprise and each category of intangible property : (a) Name and address of the associated enterprise with whom the international transaction has been entered into. (b) Description of intangible property and nature of transaction. (c) Amount paid/received or payable/receivable for purchase/sale/transfer/lease/use of each category of intangible property— (i) as per books of account; (ii) as computed by the assessee having regard to the arm’s length price. (d) Method used for determining the arm’s length price [See section 92C(1)]	Yes/No
13.	Particulars in respect of providing of services : Has the assessee entered into any international transaction(s) in respect of Services including transactions as specified in Explanation (i)(d) below section 92B(2)? If ‘yes’ provide the following details in respect of each associated enterprise and each category of service : (a) Name and address of the associated enterprise with whom the international transaction has been entered into. (b) Description of services provided/availed to/from the associated enterprise. (c) Amount paid/received or payable/receivable for the services provided/taken— (i) as per books of account; (ii) as computed by the assessee having regard to the arm’s length price. (d) Method used for determining the arm’s length price [See section 92C(1)]	Yes/No
14.	Particulars in respect of lending or borrowing of money : Has the assessee entered into any international transaction(s) in respect of lending or borrowing of money including any type of advance, payments, deferred payments, receivable, non-convertible preference shares/ debentures or any other debt arising during the course of business as specified in Explanation (i)(c ) below section 92B(2)? (a) Name and address of the associated enterprise with whom the international transaction has been entered into. (b) Nature of financing agreement. (c) Currency in which transaction has taken place (d) Interest rate charged/paid in respect of each lending/borrowing. (e) Amount paid/received or payable/receivable in the transaction— (i) as per books of account; (ii) as computed by the assessee having regard to the arm’s length price. (f) Method used for determining the arm’s length price [See section 92C(1)]	Yes/No
15.	Particulars in respect of transactions in the nature of guarantee: Has the assessee entered into any international transaction(s) in the nature of guarantee? If yes, provide the following details: (a) Name and address of the associated enterprise with whom the international transaction has been entered into. (b) Nature of guarantee agreement (c) Currency in which the guarantee transaction was undertaken (d) Compensation/ fees charged/ paid in respect of the transaction (e) Method used for determining the arm’s length price [See section 92C(1)]	Yes/No
16.	Particulars in respect of international transactions of purchase or sale of marketable securities, issue and buyback of equity shares, optionally convertible/ partially convertible/ compulsorily convertible debentures/ preference shares: Has the assessee entered into any international transaction(s) in respect of purchase or sale of marketable securities or issue of equity shares including transactions specified in Explanation (i)(c ) below section 92B(2)? If yes, provide the following details: (a) Name and address of the associated enterprise with whom the international transaction has been entered into. (b) Nature of transaction (c) Currency in which the transaction was undertaken (d) Consideration charged/ paid in respect of the transaction. (e) Method used for determining the arm’s length price [See section 92C(1)]	Yes/No
17.	Particulars in respect of mutual agreement or arrangement : Has the assessee entered into any international transaction with an associated enterprise or enterprises by way of a mutual agreement or arrangement for the allocation or apportionment of, or any contribution to, any cost or expense incurred or to be incurred in connection with a benefit, service or facility provided or to be provided to any one or more of such enterprises? If ‘yes’ provide the following details in respect of each agreement/arrangement: (a) Name and address of the associated enterprise with whom the international transaction has been entered into. (b) Description of such mutual agreement or arrangement. (c) Amount paid/received or payable/receivable in each such transaction— (i) as per books of account; (ii) as computed by the assessee having regard to the arm’s length price. (d) Method used for determining the arm’s length price [See section 92C(1)].	Yes/No
18.	Particulars in respect of international transactions arising out/ being part of business restructuring or reorganizations: Has the assessee entered into any international transaction(s) arising out/being part of any business restructuring or reorganization entered into by it with the associated enterprise or enterprises as specified in Explanation (i) (e) below section 92B(2) and which has not been specifically referred to above,? If ‘yes’, provide the following details: (a) Name and address of the associated enterprise with whom the international transaction has been entered into. (b) Nature of transaction (c) Agreement in relation to such business restructuring/ reorganization. (d) Terms of business restructuring/ reorganization. (e) Method used for determining the arm’s length price [See section 92C(1)].	Yes/No
19.	Particulars in respect of any other transaction including the transaction having a bearing on the profits, income, losses or assets of the assessee: Has the assessee entered into any other international transaction(s) including a transaction having a bearing on the profits, income, losses or asset , but not specifically referred to above, with associated enterprise? If ‘yes’ provide the following details in respect of each associated enterprise and each transaction : (a) Name and address of the associated enterprise with whom the international transaction has been entered into. (b) Description of the transaction. (c) Amount paid/received or payable/receivable in the transaction— (i) as per books of account; (ii) as computed by the assessee having regard to the arm’s length price. (d) Method used for determining the arm’s length price [See section 92C(1)].	Yes/No
20.	Particulars of deemed international transactions: Has the assessee entered into any transaction with a person other than an AE in pursuance of a prior agreement in relation to the relevant transaction between such other person and the associated enterprise? If yes, provide the following details in respect of each of such agreement (a) Name and address of the person other than the associated enterprise with whom the deemed international transaction has been entered into. (b) Description of the transaction. (c) Amount paid/received or payable/receivable in the transaction— (i) as per books of account; (ii) as computed by the assessee having regard to the arm’s length price. (d) Method used for determining the arm’s length price [See section 92C(1)].	Yes/No
PART C (Specified domestic transaction)
21.	List of associated enterprises with whom the assessee has entered into specified domestic transactions, with the following details: (a) Name, address and PAN of the associated enterprise. (b) Nature of the relationship with the associated enterprise (c) Brief description of the business carried on by the said associated enterprise.
22.	Particulars in respect of transactions in the nature of any expenditure: Has the assessee entered into any specified domestic transaction (s) being any expenditure in respect of which payment has been made or is to be made to any person referred to in section 40A(2)(b)? If “yes”, provide the following details in respect of each of such person and each transaction or class of transaction: (a) Name of person with whom the specified domestic transaction has been entered into. (b) Description of transaction along with quantitative details, if any (c) Total amount paid or payable in the transaction— (i) as per books of account; (ii) as computed by the assessee having regard to the arm’s length price.  (d) Method used for determining the arm’s length price [See section 92C(1)]	Yes/No
23.	Particulars in respect of transactions in the nature of transfer or acquisition of any goods or services: A. Has any undertaking or unit or enterprise or eligible business of the assessee [as referred to in section 80A(6), 80IA(8) or section 10AA)]transferred any goods or services to any other business carried on by the assessee? If yes, provide the following details in respect of each unit or enterprise or eligible business: (a) Name and details of business to which goods or services have been transferred (b) Description of goods or services transferred (c) Amount received/receivable for transferring of such goods or services – (i) as per the books of account; (ii) as computed by the assessee having regard to the arm’s length price. (d) Method used for determining the arm’s length price [See section 92C(1)]. B. Has any undertaking or unit or enterprise or eligible business of the assessee [as referred to in section 80A(6), 80IA(8) or section 10AA] acquired any goods or services from another business of the assessee? If yes, provide the following details in respect of each unit or enterprise or eligible business: (a) Name and details of business from which goods or services have been acquired (b) Description of goods or services acquired (c) Amount paid/payable for acquiring of such goods or services– (i) as per the books of account; (ii) as computed by the assessee having regard to the arm’s length price (d) Method used for determining the arm’s length price [See section 92C(1)].	Yes/No Yes/No
24.	Particulars in respect of specified domestic transaction in the nature of any business transacted: Has the assessee entered into any specified domestic transaction(s) with any associated enterprise which has resulted in more than ordinary profits to an eligible business to which section 80IA(10) or section 10AA applies? If “yes”, provide the following details: (a) Name of the person with whom the specified domestic transaction has been entered into (b) Description of the transaction including quantitative details, if any. (c) Total amount received/receivable or paid/ payable in the transaction - (i) as per books of account; (ii) as computed by the assessee having regard to the arm’s length price. (d) Method used for determining the arm’s length price [See section 92C(1)].	Yes/No
25.	Particulars in respect of any other transactions : Has the assessee entered into any other specified domestic transaction(s) not specifically referred to above, with an associated enterprise ? If ‘yes’ provide the following details in respect of each associated enterprise and each transaction : (a) Name of the associated enterprise with whom the specified domestic transaction has been entered into. (b) Description of the transaction. (c) Amount paid/received or payable/receivable in the transaction— (i) as per books of account; (ii) as computed by the assessee having regard to the arm’s length price. (d) Method used for determining the arm’s length price [See See section 92C(1)].	Yes/No

**Signed

Name :

Address :

Place : _____________
Date : _____________

Notes :**This annexure has to be signed by −

(i) a chartered accountant within the meaning of the Chartered Accountants Act, 1949 (38 of 1949); or

(ii) any person who, in relation to any State, is, by virtue of the provisions in sub-section (2) of section 226 of the Companies Act, 1956 (1 of 1956), entitled to be appointed to act as”.

[ F.No.142/42/2012-TPL]

(ASHISH KUMAR)

Director (Tax Policy and Legislation)

Note. - The principal rules were published in the Gazette of India, vide notification No. S.O.969 (E), dated the 26th March, 1962 and last amended by Income-tax (Fifth Amendment) Rules, 2013 vide Notification S.O. No. 1404 (E) dated 31-05-2013