CMA Final · Direct Tax Laws and International Taxation · Transfer Pricing
During proceedings on a reference concerning Sagar Textiles Ltd's royalty payment to its Singapore parent, the TPO notices another international transaction, a loan to a Dubai associate, which the assessee did not include in the report under section 172 and which was not referred to him. What is the position under section 166?
The TPO may proceed as if the loan transaction had been referred to him under section 166(1). Section 166(5) applies to a transaction that was not referred or was not included in the section 172 report and comes to his notice during the proceedings, so no fresh reference or consent is required.
- AThe TPO may treat the loan transaction as if it were referred to him under sub-section (1)Correct
- BThe TPO must return the matter to the Assessing Officer for a fresh reference
- CThe loan transaction cannot be examined because it was not referred
- DThe TPO may examine it only after the assessee's written consent
Explanation
Section 166(5) covers transactions other than those referred, and transactions not reported under section 172, that come to the TPO's notice in proceedings. The provisions of the chapter then apply as if the transaction was referred under sub-section (1). No fresh reference or consent is needed.
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