CMA Final · Direct Tax Laws and International Taxation · Transfer Pricing
Under section 166 of the Income-tax Act, 2025, an Assessing Officer may refer the determination of the arm's length price of an international transaction to the Transfer Pricing Officer only when he considers it necessary or expedient and has obtained which of the following?
The Assessing Officer needs the previous approval of the Principal Commissioner or Commissioner before referring the arm's length price determination to the Transfer Pricing Officer, in addition to considering the reference necessary or expedient. The assessee's consent is not needed.
- APrevious approval of the Principal Commissioner or CommissionerCorrect
- BPrior written consent of the assessee
- CDirections from the Dispute Resolution Panel
- DApproval of the Central Government
Explanation
Section 166(1) permits a reference to the TPO where the AO considers it necessary or expedient, but only with the previous approval of the Principal Commissioner or Commissioner. The assessee's consent, a DRP direction or Central Government approval is not required for the reference.
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