CMA Final · Direct Tax Laws and International Taxation · Transfer Pricing
Under section 166 of the Income-tax Act, 2025, an Assessing Officer wishes to refer the determination of the arm's length price of an international transaction to the Transfer Pricing Officer. What is required for this reference?
The Assessing Officer must consider the reference necessary or expedient and must take the previous approval of the Principal Commissioner or Commissioner. The section requires neither the assessee's consent nor Board approval, and it prescribes no value threshold for making the reference to the Transfer Pricing Officer.
- AThe Assessing Officer must consider it necessary or expedient and obtain previous approval of the Principal Commissioner or CommissionerCorrect
- BThe assessee must first give written consent to the reference
- CApproval of the Central Board of Direct Taxes is needed in every case
- DThe transaction value must exceed a prescribed threshold set by the Board
Explanation
Section 166(1) lets the Assessing Officer refer the matter where an international or specified domestic transaction exists and he considers the reference necessary or expedient. The reference needs the previous approval of the Principal Commissioner or Commissioner. No assessee consent, Board approval or value threshold is stated in the section.
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