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

An assessment for a tax year in which a reference was made to the TPO would normally become time-barred on 31 March. Applying section 166(7) as substituted w.e.f. 1-4-2026, by what date must the TPO pass the order determining the arm's length price?

The TPO must pass the order on or before 31 January of that year. Section 166(7)(a), as substituted from 1 April 2026, requires the order at any time before one month prior to the month in which the assessment limitation expires, which is March here.

  1. A31 January of that yearCorrect
  2. B31 December of the preceding year
  3. C28 February of that year
  4. D1 March of that year

Explanation

Section 166(7)(a) says that where the limitation period expires on 31 March, the TPO's order must be made on or before 31 January of that year, i.e. one month prior to the month of expiry. The earlier sixty-day rule would have given about 30 January, which is not the current text.

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