Exercise of option for determination of arm's length price for multiple years in a single proceeding

Exercising the option (sub-rules 1 to 3). By furnishing Form No. 46 for the two consecutive tax years (second and third) immediately following the first tax year for which the reference was made. It is furnished from the end of the third tax year until 30 June succeeding it, accompanied by an accountant's certificate in Form No. 47.

Decision (sub-rule 4). If the conditions in sub-rule (5) are fulfilled, the Transfer Pricing Officer passes a written order within one month from the end of the month in which the option is exercised, declaring it valid or invalid.

Conditions (sub-rule 5).

• The relevant transactions in the second and third years are similar to those in the first year, meaning: no change in the method; functions performed, assets employed and risks assumed materially consistent; business activities, financial, tax and accounting methods, and the classification of a company assessee materially the same (a change in the associated enterprise's results, holding structure or identity does not matter if the transaction and the functions are not materially changed); and no change in the contractual terms.
• The assessee has furnished in the first and second years the accountant's report under section 172 by the specified date and the return by the section 263(1) due date, and undertakes to do the same for the third year.
• The assessee's case for all three years is not covered by Chapter XVI-B.
• No associated enterprise is resident in a jurisdiction notified under section 176.

Objections and cancellation (sub-rules 6 to 10). If the option is declared invalid, the assessee can object to the Commissioner within fifteen days of receipt of the order; the Commissioner decides after a hearing. The order of validity is cancelled if the Form No. 46 information is inaccurate or not bona fide, the Form No. 47 certificate is to the same effect, or the sub-rule (5) conditions are not met, after a reasonable opportunity of being heard and with the Commissioner's approval. If the option is invalid or the order is cancelled, the Transfer Pricing Officer determines the arm's length price for the first tax year.