CBDT said that Indian authorities will not move from the resolution order in cross-border tax disputes which are undergoing through mutual agreement procedure(MAP) passed by ITAT. Such MAP cases shall be closed as having been resolved by a domestic remedy. MAP is an alternative tax treaty, under which 2 countries came together to resolve tax-related disputes.
The CBDT has come
out with a guidance note on the MAP. Tax
disputes of certain characteristics clearly mentioned in IT department would be
covered under MAP if they lead in taxation not in accordance with the relevant
DTAAs. India shall be given with the extreme privilege to MAP where the Indian
tax authorities apply domestic anti-abuse provisions. The CBDT also said that
in case of orders of Income Tax Appellate Tribunal (ITAT), the Competent
Authorities (CAs) of India shall not move from the orders of the ITAT for the corresponding
year where the dispute is decided on merit basis.
It said that since MAP and domestic remedy
proceedings can be availed by the taxpayers simultaneously, there could be cases
where the ITAT in India passes an order in respect of the same disputes that
are also being analysed
under MAP. It also said that if the order of the ITAT does not
solve the disputes but only sets them aside to be adjudicated afresh, then
access to MAP would be provided again after the fresh adjudication by tax
authorities.
In May, the government has already amended Income Tax rules to state that
Indian authorities would endeavor to resolve disputes under MAP within a timeframe of 24 months, a move aimed at a speedy
settlement of cases of MNCs which have opted the alternative dispute resolution
process. Nangia & Co LLP Partner Shailesh Kumar said Indian tax authorities
have apparently shown their intention to provide a speedy resolution to customers for
paying the tax opting for MAP by the appointment of two dedicated offices for
taking up MAP applications.
Thus with these instructions ,more taxpayers may
be ready to opt for MAP to resolve their
tax disputes in India. The guidelines not only provide for resolution
under Bilateral MAP applications, but also Multilateral MAP applications, where
a cross border transactions involve more than two tax treaties in a Multinational
Enterprise set-up.
AKM Global Tax Partner Amit Maheshwari said the
MAP guidance lays down the procedure for accessing MAP, clarification on
technical issues, and the implementation process. This would help taxpayers and
competent authorities of India as well
as treaty partner countries.
