CA Final · Direct Tax Laws & International Taxation · Transfer Pricing
Meridian Components Pvt Ltd, an Indian company, reported an international transaction with its Singapore parent in tax year 2026-27. The Assessing Officer, with the previous approval of the Principal Commissioner, refers the determination of the arm's length price to the Transfer Pricing Officer. Which statement is correct about the TPO's treatment of a transaction not referred to him?
The TPO may treat the additional transaction as if it had been referred to him. Section 166(5) provides that any international or specified domestic transaction coming to his notice during the proceedings is dealt with as a referred transaction, so no fresh reference or assessee consent is needed.
- AThe TPO cannot look at any transaction other than the one referred to him
- BIf another international transaction comes to the TPO's notice during the proceedings, the TPO may treat it as if it had been referred to himCorrect
- CThe TPO must first send it back to the Assessing Officer for a fresh reference with Commissioner approval
- DThe TPO can examine it only if the assessee consents in writing
Explanation
Under section 166(5), if an international or specified domestic transaction other than the one referred, or one not included in the report, comes to the TPO's notice during proceedings, the Chapter applies as if it had been referred under sub-section (1). Option A ignores this extension. Options C and D add conditions that the section does not impose.
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