CA Final · Direct Tax Laws & International Taxation · Transfer Pricing
The TPO passes an order under section 166(6) determining the ALP of Chitra Engineering Ltd's international transaction. What is the Assessing Officer's duty on receiving it?
The Assessing Officer must compute the assessee's total income in conformity with the arm's length price determined by the TPO. Under section 166(11) the TPO order is binding on the AO for this purpose; it is neither advisory nor subject to Board approval or assessee consent.
- ACompute the total income in conformity with the ALP so determined by the TPOCorrect
- BRefer the order to the Board for approval first
- CCompute the total income at his own discretion, treating the TPO order as advisory
- DWait for the assessee's consent before computing
Explanation
Section 166(11) states that on receipt of the TPO's order, the AO shall compute the total income of the assessee in conformity with the arm's length price determined by the TPO. The order is binding on the AO in this respect, not advisory.
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