CMA Final · Direct Tax Laws and International Taxation · Transfer Pricing
During proceedings on a referred transaction, the TPO notices an international transaction that the assessee did not include in the report under section 172. What is the consequence under section 166(5)?
The Chapter applies as if the unreported transaction had been referred to the TPO under section 166(1). The TPO may therefore determine its arm's length price in the same proceedings without waiting for a fresh reference from the Assessing Officer.
- AThe TPO must ignore it as it was not referred
- BThe Chapter applies as if that transaction had been referred to him under section 166(1)Correct
- CThe TPO must return it to the AO for a fresh reference
- DThe transaction is deemed to be at arm's length
Explanation
Section 166(5) applies to transactions not referred or not reported under section 172 that come to the TPO's notice. The provisions apply as if such a transaction were referred under section 166(1), so the TPO can determine its price without a separate reference.
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