CMA Final · Direct Tax Laws and International Taxation · Transfer Pricing
A tax year's arm's length price for a transaction was fixed by the Transfer Pricing Officer, and the assessee's option for the next two years was declared valid under section 166(9). Which statement is correct under section 166?
No reference can be made for such transaction for those years, and any reference made before or after the Transfer Pricing Officer's valid declaration is treated as if never made. The option does not apply to proceedings under Chapter XVI-B.
- AThe Assessing Officer may still refer the similar transaction of those years, and the reference prevails over the option
- BNo reference can be made for such transaction for those years, and a reference made before or after the declaration is treated as not madeCorrect
- CThe option also applies to proceedings under Chapter XVI-B
- DThe Transfer Pricing Officer must ignore the option if the Assessing Officer objects
Explanation
Section 166(2) bars a reference once the option is declared valid, and 166(3) treats a reference made before or after the declaration as if no reference was made. Section 166(10) excludes proceedings under Chapter XVI-B from sub-section (9), so the third option is wrong.
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