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CA Final · Direct Tax Laws & International Taxation · Transfer Pricing

The TPO sent his order under Section 166(6) determining the arm's length price of an international transaction of Ganga Steels Ltd to the Assessing Officer. What does Section 166(11) require the Assessing Officer to do next?

The Assessing Officer must compute the assessee's total income under section 165(6) in conformity with the arm's length price determined by the TPO. Section 166(11) makes this binding on the AO, with no need for assessee approval or Board confirmation.

  1. ACompute the total income under section 165(6) in conformity with the ALP determined by the TPOCorrect
  2. BSeek the assessee's approval of the ALP before computing income
  3. CRefer the ALP to the Board for confirmation
  4. DIgnore the TPO ALP if the assessee has filed a different value

Explanation

Section 166(11) states that on receipt of the TPO's order, the AO shall compute the total income under section 165(6) in conformity with the ALP so determined. The AO has no discretion to ignore it or require approval.

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