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CS Professional · Advanced Direct Tax Laws and Practice · Transfer Pricing and General Anti Avoidance Rules (GAAR)

Under the Income-tax Act, 2025, if the Board, with Central Government approval, declares an advance pricing agreement void ab initio because it was obtained by fraud, which consequence follows?

When an advance pricing agreement is declared void ab initio for fraud or misrepresentation, all provisions of the Act apply to the person as if the agreement had never existed. The period from agreement to the order is also excluded for limitation.

  1. AAll provisions of the Act apply to the person as if the agreement had never been entered intoCorrect
  2. BThe agreement stays valid for the remaining period but the price is revised
  3. COnly penalty applies and assessments already made are protected from reopening
  4. DThe agreement is void only from the date of the order

Explanation

Section 168(8)(a) provides that all provisions of the Act apply as if the agreement had never been entered into. The period from the agreement date to the order date is also excluded for limitation purposes. So a void-from-order-date view is wrong.

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