The Central Board of Direct Taxes (CBDT) has amended the Income Tax Rules, 1962 and inserted Rule 10CB for computing interest income for secondary adjustments under Transfer Pricing.
In transfer pricing parlance, a secondary adjustment, with the express sanction of law, is carried out pursuant to the primary TP adjustment. It is an adjustment in the books of accounts of the taxpayer and its AE to reflect that the total allocation of profits between the taxpayer and its AE are consistent with the transfer price determined as a result of the primary adjustment, thereby removing the imbalance between cash account and actual profit of the taxpayer.
The Finance Act, 2017 inserted a new section 92CE, which permits secondary adjustments in situations enumerated there under, with effect from April 1, 2018.
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