CMA Final · Direct Tax Laws and International Taxation · Transfer Pricing
The Transfer Pricing Officer determined the arm's length price of an international transaction for tax year 2026-27 under section 166(6). The assessee validly exercises the option under section 166(9) and the TPO declares it valid. To which tax years does the determined price apply to similar transactions?
The price applies to the two consecutive tax years immediately following 2026-27, namely 2027-28 and 2028-29, provided the assessee exercises the option in the prescribed manner and the TPO declares it valid. It does not continue indefinitely.
- AOnly 2027-28
- B2027-28 and 2028-29Correct
- C2027-28, 2028-29 and 2029-30
- DAll later tax years until revised
Explanation
Section 166(9) extends the arm's length price to the two consecutive tax years immediately following, here 2027-28 and 2028-29, if the option conditions are met. Three years is wrong because the provision says two.
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