Reference to Transfer Pricing Officer (TPO) - Section 92CA - International Taxation - Income Tax

Reference to Transfer Pricing Officer (TPO) - Section 92CA (1) Where any person, being the assessee, has entered into an international transaction or specified domestic transaction in any previous year, and the Assessing Officer considers it necessary or expedient so to do, he may, with the previous approval of the Principal Commissioner or Commissioner, refer the computation of the arm s length price in relation to the said international transaction or specified domestic transaction u/s 92C to the Transfer Pricing Officer. [ W.e.f. 01.04.2026 Provided that no reference for computation of the arm s length price in relation to an international transaction or a specified domestic transaction shall be made, if the Transfer Pricing Officer has declared that option exercised by the assessee in section 92CA(3B) in relation to such transaction is valid for such previous year: Provided further that if any reference for an international transaction or a specified domestic transaction, in respect of a previous year, for which the option is declared valid under section 92CA(3B) is made before or after such declaration by the Transfer Pricing Officer, the provisions of this sub-section shall have the effect as if no reference is made for such transaction. Inserted vide Section 21 of the Finance Act, 2025 ] [ Section 92CA(1) ] Procedure to be followed by TPO when reference is him made to:- (2) Service of notice: Where a reference is made to the TPO, the TPO shall serve a notice on the assessee requiring him to produce or cause to be produced on a date to be specified therein, any evidence on which the assessee may rely in support of the computation made by him of the arm s length price in relation to such international transaction or specified domestic transaction. [ Section 92CA(2) ] (2A) TPO empowered to determine arm s length price of other international transactions or specified domistic transaction of the assessee even though not covered under the reference made to him From 01.04.2025 - Where any other international transaction or specified domestic transaction [other than an international transaction or a specified domestic transaction referred u/s 92CA(1)], comes to the notice of the Transfer Pricing Officer during the course of the proceedings before him, the provisions of this Chapter shall apply as if such other international transaction or a specified domestic transaction is an international transaction or a specified domestic transaction referred to him u/s 92CA(1). [ Substituted vide Finance (No. 2) Act, 2024 ] Upto 31.03.2025 - Where any other international transaction [other than an international transaction referred u/s 92CA(1)], comes to the notice of the Transfer Pricing Officer during the course of the proceedings before him, the provisions of this Chapter shall apply as if such other international transaction is an international transaction referred to him u/s 92CA(1). [ Section 92CA(2A) ] (2B) Provisions of transfer pricing shall also apply to international transaction for which report u/s 92E is not furnished by the assessee From 01.04.2025 - Where in respect of an international transaction or a specified domestic transaction, the assessee has not furnished the report u/s 92E and such transaction comes to the notice of the Transfer Pricing Officer during the course of the proceeding before him, the provisions of this Chapter shall apply as if such transaction is an international transaction or a specified domestic transaction referred to him u/s 92CA(1). [ Substituted vide Finance (No. 2) Act, 2024 ] Upto 31.03.2025 - Where in respect of an international transaction, the assessee has not furnished the report u/s 92E and such transaction comes to the notice of the TPO during the course of the proceeding before him, the provisions of this Chapter shall apply as if such transaction is an international transaction referred to him u/s 92(1). [ Section 92CA(2B) ] (2C) Nothing contained in section 92CA(2B) shall empower the Assessing Officer either to assess or reassess u/s 147 or pass an order enhancing the assessment or reducing a refund already made or otherwise increasing the liability of the assessee u/s 154, for any assessment year, proceedings for which have been completed before 1.7.2012. [ Section 92CA(2C) ] (3) TPO to pass order in writing: On the date specified in the above notice, or as soon thereafter as may be,- After hearing such evidence as the assessee may produce, including any information or documents referred u/s 92D(3) and after considering such evidence as the TPO may require on any specified points; and After taking into account all relevant materials which he has gathered, the Transfer Pricing Officer shall, by order in writing, determine the arm s length price in relation to the international transaction in accordance with section 92C(3) and send a copy of his order to the Assessing Officer and to the Assessee. [ Section 92CA(3) ] (3A) TPO to pass order at any time before 60 days prior to limitation period referred u/s 153 or u/s 153B : Where a reference u/s 92CA(3) has not been made by the TPO before the said date, or a reference under section 92CA(1) is made on or after 1.6.2007, an order u/s 92CA(3) may be made at any time before 60 days prior to the date on which the period of limitation referred u/s 153 or as the case may be u/s 153B for making the order of assessment or reassessment or recomputation or fresh assessment, as the case may be, expires. Provided that in the circumstances referred to in clause (ii) or clause (x) of Explanation (1) to section 153, if the period of limitation available to the Transfer Pricing Officer for making an order is less than sixty days, such remaining period shall be extended to sixty days and the aforesaid period of limitation shall be deemed to have been extended accordingly. [ Section 92CA(3A) ] [(3B) The arm s length price, being determined in relation to the international transaction or the specified domestic transaction under section 155(3) for any previous year shall apply to similar international transaction or specified domestic transaction for the two consecutive previous years immediately following such previous year, on fulfilment of the following conditions, namely: (a) the assessee exercises an option or options to the above effect for the said two consecutive previous years; (b) such option or options are exercised in such form, manner and within such period as prescribed; and (c) the Transfer Pricing Officer shall, within one month from the end of the month in which such option or options are exercised, by an order in writing, declare that such option or options are valid subject to the conditions, as prescribed: The provisions of section 92CA(3B) shall not apply to any proceedings under Chapter XIV-B. W.e.f. 01.04.2026 Inserted vide Section 21 of the Finance Act, 2025 ] [ Section 92CA(3B) ] (4) Steps to be taken by the Assessing Officer on receipt of order on the TPO : On receipt of the order u/s 92CA(3), the Assessing Officer shall proceed to compute the total income of the Assessee u/s 92C(4) in conformity with the arm s length price as so determined by the Transfer Pricing Officer. It may be observed from the above that it will be mandatory for the Assessing Officer to compute the total income on the basis of arm s length price determined by the Transfer Pricing Officer. [ Section 92CA(4) ] [(4A) Notwithstanding anything contained in section 92CA(4), where the Transfer Pricing Officer has declared an option exercised by the assessee as valid option under section 92CA(3B), he shall examine and determine the arm s length price in relation to such similar transaction for two consecutive previous years immediately following such previous year, in the order referred to in section 92CA(3) and on receipt of such order, the Assessing Officer shall proceed to recompute the total income of the assessee for the said two consecutive previous years as per the provisions of section 155(21) . W.e.f. 01.04.2026 Inserted vide Section 21 of the Finance Act, 2025 ] [ Section 92CA(4A) ] (5) Rectification of order passed by TPO: With a view to rectifying any mistake apparent from the record, the Transfer Pricing Officer may amend any order passed by him, and the provisions of section 154 shall, so far as may be, apply accordingly. [ Section 92CA(5) ] (6) Where any amendment of such order is made by the Transfer Pricing Officer, he shall send a copy of his order to the Assessing Officer who shall thereafter proceed to amend the order of assessment in conformity with such order of the TPO. [ Section 92CA(6) ] (7) Powers of TPO for the purpose determining arm s length price: The Transfer Pricing Officer may, for the purposes of determining the arm s length price under this section, exercise all or any of the powers specified in clauses ( a ) to ( d ) of section 131(1) or u/s 133(6) or u/s 133A thus, TPO shall now have power to conduct on the spot enquiry and verification. [ Section 92CA(7) ] Some Relevant Point Transfer Pricing Officer Transfer pricing officer means a joint Commissioner or Deputy Commissioner or Assistant Commissioner authorized by the Board to perform all or any of the functions of an Assessing Officer specified u/s 92C and 92D in respect of any person or class of persons .