Section 167 of Income Tax Act 2025
- (1)The determination of—
shall be subject to safe harbour rules.
- (2)For the purposes of sub-section (1), the Board may make rules for safe harbour.
- (3)For the purposes of this section, "safe harbour" means circumstances in which the income-tax authorities shall accept,—
- (a)the transfer price; or
- (b)the income, deemed to accrue or arise under section 9(2),
declared by the assessee.
Summary
- It empowers the Board to make safe harbour rules for taxpayers.
- It applies to the determination of income under Section 9(2) or the arm's length price under Section 165 or 166.
- Safe harbour is defined as specific circumstances where the tax authorities must accept the figures declared by the taxpayer.
- These accepted figures include either the declared transfer price or the declared income deemed to accrue or arise under Section 9(2).
Practical examples
FAQ
1. What does the term "safe harbour" mean under Section 167?
It means specific circumstances in which the income-tax authorities shall accept the transfer price or income declared by the taxpayer.
2. Which section's deemed income can be subject to safe harbour rules?
Deemed income under Section 9(2) is subject to safe harbour rules.
3. Who has the authority to make safe harbour rules under this section?
The Board (Central Board of Direct Taxes) is empowered to make these rules.
4. Can safe harbour rules apply to the arm's length price determined under Section 165 or Section 166?
Yes, the determination of the arm's length price under both Section 165 and Section 166 is subject to safe harbour rules.
Test yourself
Q1.Under Section 167, whose declaration of transfer price or income must the tax authorities accept if safe harbour conditions are met?
Q2.Safe harbour rules can be made by the Board to determine income under which specific subsection?
Q3.Which body is empowered to make rules for safe harbour under Section 167?