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CMA Final · Direct Tax Laws and International Taxation · Transfer Pricing

During proceedings on a reference for Transaction A, the TPO finds that the assessee also had international Transaction B, which was not referred to him and not included in the report under section 172. Which statement follows from section 166?

The TPO can deal with Transaction B as if it had been referred to him under sub-section (1). Section 166(5) covers transactions that come to his notice during proceedings, whether unreferred or omitted from the report, so no fresh reference or consent is required.

  1. AThe TPO must ignore Transaction B as it was not referred
  2. BThe TPO must send Transaction B back to the Assessing Officer for a fresh reference with Board approval
  3. CThe provisions apply as if Transaction B had also been referred to the TPO under sub-section (1)Correct
  4. DTransaction B can be examined only after the assessee gives written consent

Explanation

Section 166(5) says that where an international transaction not referred, or not reported under section 172, comes to the TPO's notice during proceedings, the provisions apply as if it were referred under sub-section (1). No fresh reference or consent is needed, so the other options are wrong.

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