CMA Final · Direct Tax Laws and International Taxation · Transfer Pricing
Under section 166 of the Income-tax Act, 2025, after the TPO sends his order determining the arm's length price to the Assessing Officer, what must the Assessing Officer do?
The Assessing Officer must compute the assessee's total income in conformity with the arm's length price determined by the Transfer Pricing Officer. He cannot redetermine the price, and neither assessee consent nor Board approval is required for that step.
- ACompute the total income in conformity with the arm's length price determined by the TPOCorrect
- BHold a fresh determination of the arm's length price and ignore the TPO's order
- CWait for the assessee's consent before computing income
- DRefer the order to the Board for approval
Explanation
Section 166(11) requires the Assessing Officer, on receipt of the TPO's order, to compute the total income in conformity with the arm's length price as determined by the TPO. He has no discretion to redetermine it or to await consent.
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