CA Final · Direct Tax Laws & International Taxation · Transfer Pricing
Vihaan Textiles Ltd. entered into an international transaction in a tax year. The Assessing Officer considers it necessary to refer the determination of the arm's length price to the Transfer Pricing Officer (TPO). Under section 166 of the Income-tax Act, 2025, what is required before such a reference is made?
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. The assessee's consent, Board approval or a Dispute Resolution Panel order is not required for this reference under section 166(1).
- APrevious approval of the Principal Commissioner or CommissionerCorrect
- BWritten consent of the assessee
- CPrior approval of the Central Board of Direct Taxes
- DPrior order of the Dispute Resolution Panel
Explanation
Section 166(1) permits the Assessing Officer to refer the determination of the arm's length price to the TPO if he considers it necessary or expedient, with the previous approval of the Principal Commissioner or Commissioner. The assessee's consent is not needed. Approval of the Board or a Dispute Resolution Panel order is not a requirement for the reference.
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