122. Procedure to deal with requests for bilateral or multilateral advance pricing agreements.—

(1) Where a person has made request for a bilateral or multilateral advance pricing agreement in an application filed in Form No. 51 in accordance with rule 106, the request shall be dealt with subject to provisions of this rule.

(2) The process for bilateral or multilateral advance pricing agreement shall commence only if the associated enterprise located outside India has initiated process of advance pricing agreement with the competent authority of the other country.

(3) On intimation of request of the applicant for a bilateral or multilateral agreement, the competent authority of India shall consult and ascertain willingness of the competent authority of other country or countries, as the case may be, for initiation of negotiation for this purpose.

(4) In case of willingness of the competent authority of other country or countries, as the case may be, the competent authority of India shall enter into negotiation in this behalf and endeavour to reach mutually acceptable terms with the competent authority of the other country or countries, as the case may be.

(5) Upon reaching an agreement after consultation, the competent authority of India shall formalise a mutual agreement procedure arrangement with the competent authority of other country or countries, as the case may be, and intimate the same to the applicant

.

(6) In case of failure to reach agreement on mutually acceptable terms as mentioned in sub-rule (4), the applicant shall be informed of the same.

(7) The applicant shall not be entitled to be part of discussion between competent authority of India and the competent authority of the other country or countries, as the case may be, but the applicant may communicate or meet the competent authority of India for the purpose of entering into an advance pricing agreement.

(8) The applicant shall convey acceptance or otherwise of the agreement within one month from the end of the month in which communication has been received.

(9) If the applicant does not accept the agreement, it may, ––

(a) continue the advance pricing agreement process without the benefit of the mutual agreement procedure; or

(b) withdraw the application in accordance with rule 107.