CA Final · Direct Tax Laws & International Taxation · Transfer Pricing

After the TPO passes an order under section 166(6) for Ganga Steel Ltd, which of the following correctly describes what the Assessing Officer does under section 166(11), and what happens if a mistake apparent from the record is found in the TPO's order?

The Assessing Officer must compute total income in conformity with the arm's length price determined by the TPO. If a mistake apparent from the record exists, the TPO may amend his own order and send a copy to the Assessing Officer, who then amends the assessment accordingly.

1. AThe AO computes total income in conformity with the TPO's arm's length price; the TPO may amend his order for the mistake and send a copy to the AO, who amends the assessment accordinglyCorrect
2. BThe AO may disregard the TPO's price and adopt his own; a mistake can be rectified only by the Commissioner
3. CThe AO computes total income only after the assessee accepts the price; the TPO cannot amend his order
4. DThe AO forwards the order to the Board, which fixes the final price and rectifies mistakes