Transfer Pricing Assessment — Section 92CA | Savlana Init

Transfer Pricing · Assessment

Transfer Pricing Assessment — The TPO Has the File. Now What?

Once the assessing officer refers the matter to a Transfer Pricing Officer, a defined procedural sequence runs. Understanding each step is what allows it to be managed rather than merely endured.

Section 92CA allows the assessing officer, with prior approval of the Principal Commissioner or Commissioner, to refer the determination of arm's length price to a Transfer Pricing Officer. The reference triggers a separate proceeding that runs alongside the main assessment. The Transfer Pricing Officer issues notices, calls for information and documents under Section 92D, may conduct an inquiry, and ultimately passes an order determining the arm's length price. That order is then communicated to the assessing officer, who is bound by it and must incorporate it into the draft assessment order.

The Transfer Pricing Officer's powers are considerable. He may refer valuation of property to a valuation officer, seek information from third parties, enhance the variation beyond what the assessing officer originally proposed, and compute adjustments on transactions that were not the subject of the original reference — provided he brings the taxpayer's attention to the proposed enhancement and gives an opportunity to be heard. Enhancement beyond the reference is a power that takes many taxpayers by surprise, and it is one reason the scope of the first response to any notice matters.

The proceeding runs on its own timeline, separately from the main assessment. The Transfer Pricing Officer must pass his order in time for the assessing officer to use it, since the limitation period for the main assessment runs whether or not the transfer pricing proceeding has concluded. Where the order is delayed, the assessing officer may be required to complete the assessment without it. Secondary adjustments under Section 92CE arise automatically where a primary adjustment exceeds the prescribed threshold, and thin capitalisation under Section 94B is a separate adjustment that the assessing officer may make without reference to a Transfer Pricing Officer. We appear before the Transfer Pricing Officer and build a record capable of standing through objections and appeal.

Our TP Assessment Services

Reference Notice Response

Response to the initial notice from the Transfer Pricing Officer, establishing the scope of the reference and the transactions it covers.

Information and Document Submission

Preparation and filing of information and documents called for under Section 92D, with each item checked for consistency with Form 3CEB.

Functional and Comparability Defence

Written submissions defending the functional characterisation, method selection, comparables and adjustments in the study on the record.

Enhancement Exposure Management

Monitoring the scope of the proceedings to identify and respond to proposed enhancements beyond the original reference in time to be heard.

Hearing Representation

Representation at the personal hearing before the Transfer Pricing Officer with counsel, evidence and case law on each contested issue.

Draft Order Review

Analysis of the Transfer Pricing Officer's order issue by issue, distinguishing errors of fact, computation and law for the next stage.

Secondary Adjustment Advisory

Section 92CE compliance where a primary adjustment triggers the repatriation or imputed interest consequences.

Thin Capitalisation Defence

Analysis and defence of Section 94B interest limitation adjustments made by the assessing officer separately from the transfer pricing reference.

Our Process

Notice Review and Scoping

We establish the scope of the reference — which transactions, which years, which entities — and identify what is and what is not properly within it.

Record Organisation

The benchmarking study, Form 3CEB, intercompany agreements, financial data and correspondence are organised into a single coherent file for the proceedings.

Submissions and Hearings

Written submissions are prepared and hearings are attended, with the factual record built comprehensively at this stage, since it anchors everything later.

Enhancement Watch

The proceedings are monitored for signals of proposed enhancement, and protective submissions are filed on transactions not in the original reference.

Order Analysis and Next Steps

The order is analysed as soon as it arrives, the route forward is assessed, and stay and objections are filed without delay where warranted.

Why It Matters

✓Scope of the reference established, so enhancement can be resisted

✓Document submissions consistent with Form 3CEB and the study

✓Factual record built in the TPO proceedings, where it counts most

✓Enhancement beyond the reference identified and challenged promptly

✓Written submissions that become the paper book for Tribunal

✓Secondary adjustment compliance managed before it compounds

✓Thin capitalisation exposure assessed alongside the main reference

✓Order analysed immediately so the route forward is chosen without delay

Frequently Asked Questions

Where the assessing officer has made a reference covering certain transactions, the Transfer Pricing Officer ordinarily determines the arm's length price for those transactions. He may propose enhancement beyond the draft variation if he identifies other income that ought to be adjusted, but he must give notice of the proposed enhancement and an opportunity to be heard before passing the order. The taxpayer's response to that notice is one of the most consequential steps in the proceeding.

Yes. Once passed, the order is communicated to the assessing officer who is bound to incorporate it into the draft assessment order or final order as the case may be. The assessing officer has no power to depart from it, which is why the Transfer Pricing Officer's order is the correct document to contest rather than waiting for the assessment.

Rule 10D documentation maintained before the filing date remains the primary evidence, and its quality directly affects the assessment outcome. The Transfer Pricing Officer may call for specific documents, additional information and third-party data. Consistency between the study, Form 3CEB, the intercompany agreements and the documents produced during assessment is what determines credibility.

The Transfer Pricing Officer has powers of inquiry and may examine persons, obtain information from third parties, and take any steps reasonably necessary to determine the arm's length price. While a premises visit is less common than written information requests, powers under the general assessment provisions apply to the extent necessary. The practical consequence is that internal consistency — between books, agreements and the study — matters throughout.

The order must be passed in time for the assessing officer to complete the main assessment within its limitation period. Where the assessing officer's limitation falls before the Transfer Pricing Officer can pass a timely order, the assessing officer may complete the assessment without it. The timeline therefore depends on when the reference was made relative to the limitation period of the main assessment.

Where the primary adjustment exceeds the prescribed threshold and results in an increase in the total income or a reduction in the loss, Section 92CE requires that the excess money be repatriated to India from the associated enterprise within the prescribed period. Failure to repatriate results in the amount being deemed an advance and interest being imputed indefinitely. A one-time tax option is available instead of repatriation.

Received a Transfer Pricing Officer notice?

Send us the notice and your study. We will scope the reference, organise the record, represent at the hearings and build the file that carries through to any subsequent appeal.