CA Final · Direct Tax Laws & International Taxation · Transfer Pricing
Meru Pharma Ltd filed its report under section 172 disclosing only its royalty payment to an associated enterprise. During proceedings on a reference limited to the royalty, the TPO notices a loan advanced to another associated enterprise that Meru omitted from the report. Which is correct under section 166?
The TPO can examine the loan and determine its arm's length price as if it had been referred to him under section 166(1). The Act treats transactions that come to his notice during proceedings, or that were omitted from the section 172 report, as deemed referred, without fresh reference or consent.
- AThe TPO may treat the loan as if referred to him under section 166(1) and determine its arm's length priceCorrect
- BThe TPO must ignore the loan as it was not referred to him
- CThe TPO must first return the matter to the Assessing Officer for a fresh reference
- DThe loan can be examined only if the assessee consents in writing
Explanation
Section 166(5) applies where a transaction not referred, or one not included in the section 172 report, comes to the TPO's notice during proceedings; the provisions of the Chapter apply as if it were referred under section 166(1). The loan is both unreferred and omitted from the report, so no fresh reference or consent is needed.
Did you get it right without looking?
One question tells you little. A timed set on Transfer Pricing shows your real accuracy, how long you take and where you lose marks.
More Transfer Pricing questions
- The TPO determined the arm's length price of a transaction of Sundaram Textiles Ltd for tax year 1 under Section 166(6). The assessee exerci…
- For the tax year 2026-27, the TPO determined the arm's length price of Bharat Chemicals Ltd's import of raw material from its associated ent…
- Mahalakshmi Auto Ltd entered into an international transaction with its associated enterprise in a tax year. The Assessing Officer considers…
- Kaveri Pharma Ltd's assessment for a tax year is subject to a reference to the TPO under section 166. The limitation for completing the asse…
- For a tax year, the TPO declared valid Meridian Chemicals Ltd.'s option under section 166(9) for a particular international transaction. Lat…
- Kaveri Pharma Ltd had its arm's length price for an international transaction determined by the TPO under section 166(6) for a tax year. Kav…