Rule 120 says that merely filing an advance pricing agreement application does not stop the arm's length price rules in Chapter X applying, and that negotiations with foreign competent authorities follow the tax treaty.
120
Rules 2026 · Rule 120
Miscellaneous (advance pricing agreement)
Rules 77-130
The rule. Filing an application under these rules does not prevent the operation of Chapter X for determining arm's length price until the agreement is entered into (sub-rule 1). Negotiation between the competent authority of India and the competent authority or authorities of the other country or countries, in a bilateral or multilateral case, is carried out in accordance with the tax treaty between India and that country or those countries (sub-rule 2).