CMA Final · Direct Tax Laws and International Taxation · Transfer Pricing
Under the Income-tax Act, 2025, who may make a reference to the Transfer Pricing Officer for determining the arm's length price of an international transaction, and subject to what approval?
The Assessing Officer makes the reference, when he considers it necessary or expedient, and he needs the previous approval of the Principal Commissioner or Commissioner. The assessee, Board or Tribunal has no such role, and there is no automatic monetary trigger.
- AThe Assessing Officer, with the previous approval of the Principal Commissioner or CommissionerCorrect
- BThe assessee, with the previous approval of the Board
- CThe Assessing Officer, without any approval, whenever the transaction exceeds Rs 1 crore
- DThe Appellate Tribunal, with the approval of the Central Government
Explanation
Section 166(1) lets the Assessing Officer refer the determination of arm's length price to the TPO if he considers it necessary or expedient, with previous approval of the Principal Commissioner or Commissioner. No monetary threshold or Board approval is stated, so the other options are wrong.
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