The document discusses Form 3CEB which requires taxpayers to obtain an accountant's report certifying related party transactions over Rs. 1,000. Key details include: 1) Form 3CEB must be filed electronically by November 30th and includes details of international and specified domestic transactions with related parties. 2) The accountant preparing the form must meet certain criteria and is responsible for examining records and certifying transactions are documented and values are arm's length. 3) Non-compliance can result in penalties for the taxpayer and accountant. Caveats are that the accountant's examination is limited and transfer pricing rules may not apply to all related party transactions. 4) Many countries have similar

1. Form 3CEB and Practical Issues
CA. Divakar Vijayasarathy

2. Credits and Acknowledgments
Bharathi Priya R D
CA Jugal Gala

3. Presentation Schema
Form 3CEB –
Purpose
Rationale for
Form 3CEB
Form 3CEB Report
Annexure to
Form 3CEB
Procedure Penal Provisions
Accountant’s
Responsibility
Caveats and
Issues
Global
Perspective

4. Report From An Accountant – Sec 92E
Any person who has entered into an international transaction or specified
domestic transaction, during a previous year
Must obtain Report from an accountant in Form 3CEB (Rule 10E) under
Sec 92E
Certifying the transactions, amount and methods used to justify the
transaction
Filing of Form 3CEB must be electronically on or before 30th November of
the assessment year

5. Rationale
Introduced in the Finance Act, 2011
To ensure that all related party transactions are being informed to the Income Tax Department
Certification by an Accountant makes the Form a reliable document

6. Accountant Definition – Sec 288(2)
A Chartered Accountant who holds a valid certificate of practice (COP)
But does not include
In case of a company, a person disqualified from being an auditor as per Companies Act
In any other cases,
i. The assessee himself or the members in case of assessee being AOP, HUF or Firm
ii. In case of trust or institution, the author or trustee or any person making substantial contribution
iii. In case of any other person other than i and ii, a person competent to verify the return
iv. Any relative of person referred to in i, ii & iii
v. An officer or employee of the assessee
vi. An individual who is a partner or who is in employment of an officer or employee of the assessee
vii. An individual who or his relative or partner –
• Holds interest/security in the assessee, provided relative can hold upto Rs.1,00,000
• Is indebted to the assessee, provided relative can be indebted upto Rs. 1,00,000
• Has given guarantee or provided security to the assessee for a 3rd party, provided relative may guarantee or
provide security for amount upto Rs. 1,00,000
viii. A person, directly or indirectly having business relationship with the assessee of the nature specified
ix. A person convicted for fraud and a period of 10 years has not elapsed from date of conviction

7. Form 3CEB
Form 3CEB
Report Annexure to Form 3CEB
Part A
General
(Clause 1 – Clause 9)
Part B
International Transactions
(Clause 10 – Clause 20)
Part C
Specified Domestic Transactions
(Clause 21 – Clause 25)

8. Report
Examination of accounts and records relating to international transaction and specified domestic
transaction –Name and address of assessee along with PAN
Certifying that proper information and documents have been kept by the assessee
Assurance that the particulars given in the annexure are true and correct
Name, address and Membership number of accountant - Date and place must be mentioned
Report must be digitally signed by accountant

9. Part A of Annexure to Form 3CEB
Name and address of the assessee
Permanent Account Number (PAN)
Nature of business or activities of the assessee*
Status of the assessee
Previous year ended and Assessment year
Aggregate value of international transaction / Specified Domestic Transaction (SDT) as per books of
accounts
*Code for nature of business to be filled in as per instructions for filling Form ITR 6
Clause 1 – Clause 9

10. Code For Nature of Business for AY 2019-20

11. Contd…

12. Contd.
*The list continues upto code 22001 including sectors like Computer and related services, Research and development,
Professions, Education services, Health care services, Social and community work, culture and sport, other services and Extra
territorial organisations and bodies

13. Contents of Part B – International Transaction
List of AE with whom the assessee has entered into International
transaction with the following details
A Name of the AE
B Nature of the relationship with AE as referred to in Sec 92A(2)
C Description of the business carried on by the AE
Clause 10

14. Contd…
Particulars in respect of transactions in tangible property
Has the assessee entered into International transaction in respect of
I. Purchase/sale of raw material,
consumables or any other
supplies for assembling or
processing/manufacturing of
goods or articles from/to AE
II. Purchase/sale of traded/finished
goods
III. Purchase, sale, transfer, lease
or use of any other tangible
property including transactions
specified in Explanation(i)(a) of
Sec 92B(2)
If yes, the following details in respect of each AE and each/class of transaction must be mentioned
A Name and address of AE
B Description of transaction and quantity purchased/sold For I and II
C Description of the property and nature of transaction
For III
Number of units of each category of tangible property involved in the transaction
D Total amount paid/received or payable/receivable in the transaction
(i) as per books of account
(ii) as computed by the assessee having regard to the arm’s length price
E Method used for determining the arm’s length price
Clause 11

15. Contd…
I. Particulars in respect of transactions in
intangible property including transactions
specified in Explanation(i)(b) of Sec
92B(2)
II. Particulars in respect of providing
services including transactions
specified in Explanation(i)(d) of Sec
92B(2)
Has the assessee entered into International transaction. If yes, the following
details in respect of each AE and each/class of transaction must be mentioned
A Name and address of the AE
B Description of intangible property and nature of transaction For I
C Description of services provided/availed to/from the AE For II
Total amount paid/received or payable/receivable in the transaction
(i) as per books of account
(ii) as computed by the assessee having regard to the arm’s length
price
E Method used for determining the arm’s length price
Clause 12 Clause 13

16. Contd…
I. Particulars in
respect of lending
or borrowing of
money
II. Particulars in
respect of
transactions in the
nature of guarantee
III. Particulars in respect of purchase/sale of marketable
securities, issue and buyback of equity shares, optionally
convertible/ partially convertible/compulsorily
convertible debentures/preference shares
Has the assessee entered into International transaction. If yes, the following details in respect of each
AE and each/class of transaction must be mentioned
A Name and address of the AE
B Nature of financing/guarantee agreement/transaction
C Currency in which transaction was undertaken
D Interest rate charged/paid in respect of cash lending/borrowing
Compensation/fees charged/paid in respect of the transaction
Consideration charged/paid in respect of the transaction
For I
For II
For III
E Total amount paid/received or payable/receivable in the transaction
(i) as per books of account
(ii) as computed by the assessee having regard to the arm’s length price
For I
F Method used for determining the arm’s length price
Clause 15 Clause 16Clause 14

17. Contd…
I. Particulars in respect of
mutual agreement or
arrangement
II. Particulars in respect of
arising out/being part of
business restructuring or
reorganizations
III. Particulars in respect of any other
transaction including the transaction having
a bearing on the profits, income, losses or
assets of the assessee
Has the assessee entered into International transaction. If yes, the following details in respect of each AE and
each/class of transaction must be mentioned
A Name and address of the AE
B Nature of transaction/Description of such mutual agreement or arrangement
C Agreement and terms in relation to such business restructuring/reorganization For II
D Total amount paid/received or payable/receivable in the transaction
(i) as per books of account
(ii) as computed by the assessee having regard to the arm’s length price
E Method used for determining the arm’s length price
Clause 18Clause 17 Clause 19

18. Contd…
Particulars of deemed international transaction
Has the assessee entered into any transaction with a person other than AE in pursuance of a
prior agreement. If yes, the following details in respect of such agreement must be mentioned
A Name and address of the person other than AE
B Description of the transaction
C Total amount paid/received or payable/receivable in the transaction
(i) as per books of account
(ii) as computed by the assessee having regard to the arm’s length price
D Method used for determining the arm’s length price
Clause 20
Transaction entered into by an
enterprise with a person other
than an AE
Prior agreement between other
person and AE or the terms of
the relevant transaction are
determined in substance
between other person and AE
Either enterprise or AE or both
are non-resident and other
person may or may not be a
non-resident
Deemed International Transaction – Sec 92B(2)

19. Contents of Part C – Specified Domestic
Transaction
List of AE with whom the assessee has entered into
Specified Domestic Transaction with the following details
A Name, address and PAN of the AE
B Nature of the relationship with AE
C Description of the business carried on by the AE
Clause 21

20. Contd…
Particulars in respect of transactions in
the nature of any expenditure
Particulars in respect of transactions in the nature of transfer or acquisition of
any good or service
Transfer of any good or service Acquisition of any good or service
Has the assessee has entered into any specified domestic
transaction being any expenditure in respect of which
payment has been made or is to be made to any person
referred to in Sec 40A(2)(b)
Has any undertaking or unit or enterprise or eligible business
of the assessee [as referred to in section 80A(6), 80IA(8) or
section 10AA)]transferred any goods or services to any other
business carried on by the assessee
If yes, the following details in respect of such agreement must be mentioned
A Name of the person / Name and details of business to which goods or services have been transferred
B Description of transaction along with quantitative details / Description of goods/services transferred or acquires
C Total amount paid/received or payable/receivable in the transaction
(i) as per books of account
(ii) as computed by the assessee having regard to the arm’s length price
D Method used for determining the arm’s length price
Clause 22 Clause 23

21. Contd…
Particulars in the nature of any business transacted Particulars in respect of any other transactions
Has the assessee has entered into any specified
domestic transaction with any associated enterprise
which has resulted in more than ordinary profits to an
eligible business to which section 80IA(10) or section
10AA applies
Has the assessee entered into any other
specified domestic transaction(s) not specifically
referred to above, with an associated enterprise
If “yes”, provide the following details
Name of the AE / person
Description of transaction along with quantitative details
Total amount paid/received or payable/receivable in the transaction
(i) as per books of account
(ii) as computed by the assessee having regard to the arm’s length price
Method used for determining the arm’s length price
Clause 24 Clause 25

22. Procedure
Accountant has to log-in using his professional user ID and password
Click e-file and type PAN of assessee and accountant’s PAN
Select Form 3CEB
Assessee has to appoint accountant for certifying Form 3CEB and accountant shall upload Form 3CEB (prepared through XML schema
and signed through DSC utility) on behalf of assessee, the process gets complete once assessee approves the form filed by CA
Return filing shall
always be after filing
of Form3CEB
To download Form 3CEB XML file and DSC utility visit www.incometaxindiaefiling.gov.in/downloads/
Form 3CEB can be
revised
Under Filing Type
dropdown will display
original or revised

23. Penal Provisions
Particulars Penalty
Failure to maintain documentation–Sec 271AA(1)(i)
2% of value of
transaction
Failure to report transaction –Sec 271AA(1)(ii)
Furnishing of incorrect information or document –Sec 271AA(1)(iii)
Failure to file report under Sec 92E in Form 3CEB – Sec 271BA ₹ 1,00,000
Furnishing incorrect information by an accountant –Sec 271J ₹ 10,000

24. Accountants Responsibility
Always better to prepare notes and working papers, basis on which certification is done – can rely on works done by other
auditors
The accountant should obtain a written representation from the assessee providing him with the name, address, legal status
and country of tax residence of each of the enterprises with whom international transactions have been entered into by the
assessee, and association linkages among them
Always preferable to check Form 3CD and schedule for related party transactions in the financials to have a preliminary idea
on Related Party Transactions
Communicate with earlier auditor and statutory auditor (if not the certifying auditor) - obtain letter of appointment from
assessee
The Chartered Accountant has to give his/her opinion whether proper documents are maintained as per Section 92D and
Rule 10D and confirm its correctness in respect of such international transaction or specified domestic transaction

25. Caveats and Issues
The scope of examination is restricted to such examination of accounts and records relating to the
international transaction and/ or specified domestic transactions
Internal auditor in its independent capacity can certify Form 3CEB, provided he/she is not an employee
No exemption from filing Form 3CEB i.e. even if the assessee has entered into international transaction of ₹
1,000 Form 3CEB must be filed
Transfer pricing regulation do not apply for parties/transactions referred in Sec 40A(2)(b) – still Form 3CEB
has the clause

26. Contd.
Ensuring completeness of the listing of transactions is the responsibility of the assessee
Revision of Form 3CEB – Act or Rule doesn’t specify anything but option available on portal to upload revised
Form 3CEB
There is no clause provided in Form 3CEB to disclose the benefit of tolerance range (1% or 3% as the case may
be) available to the assessee
Whether assessee has opted for safe harbour or not cannot be disclosed in Form 3CEB

27. Recent Amendment (Ordinance Passed on
20.09.2019)
New Domestic manufacturing companies shall have the option to pay Income-tax at the rate of 15%, subject to
specified conditions – Sec 115BAB
Unabsorbed depreciation and unexpired MAT credit shall not be allowed to be adjusted if opted for above
Transaction between above mentioned company and any other person gets covered under Sec 92BA as a
specified domestic transaction
Where Assessing Officer feels that the said transaction generates extra-ordinary profits, he/she may
recalculate as reasonably deemed fit, abiding by the principles of ALP

28. Global Perspective
Country Reporting Requirements
Singapore If Related Party Transaction disclosed in the financial statements is > Singapore Dollars 15 million
a form named Form For Reporting Related Party Transactions along with Form C (e-filing form)
must be filed
Malaysia Selected taxpayers will receive a letter with the attached Form MNE (Information on Cross
Border Transaction) and are generally required to complete and submit within 30 days from the
date of the letter
Brazil Simplified Local File that must be filed together with the annual corporate tax return
Netherlands Taxpayer has to file the CBC (Country By Country)report within one year after the closing of the
fiscal year
United
Kingdom
The CbC (Country by Country) report has to be filed with HMRC (Her Majesty's Revenue and
Customs) within 12 months following the end of the period it relates to.

29. Thank You
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