CMA Final · Direct Tax Laws and International Taxation · Transfer Pricing
Under the Income-tax Act, 2025, who may refer the determination of the arm's length price of an international transaction to the Transfer Pricing Officer, and with what approval?
The Assessing Officer may refer the determination of the arm's length price to the Transfer Pricing Officer when he considers it necessary or expedient, but only with the previous approval of the Principal Commissioner or Commissioner. Neither the assessee nor an appellate authority makes the reference.
- AThe Assessing Officer, if he considers it necessary or expedient, 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 15 crore
- DThe Commissioner (Appeals), with the approval of the Principal Chief Commissioner
Explanation
Section 166(1) lets the Assessing Officer refer the ALP determination to the TPO when he considers it necessary or expedient, with previous approval of the Principal Commissioner or Commissioner. The assessee and the appellate authority have no such power, and no monetary threshold substitutes for the approval.
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