EXISTING Section 263 of the Income tax Act provides for revision of an order which is erroneous in so far as it is prejudicial to the interests of revenue, and such order u/s 263 can be passed within two years from the end of the financial year in which the order sought to be revised was passed.

As per provisions of section 92CA, if the Assessing Officer considers it necessary or expedient, he may, with the approval of the Principal Commissioner or Commissioner refer the computation of arm's length price/ specified domestic transaction entered into by an assessee, to the Transfer Pricing Officer (TPO), who passes an order and send it to the Assessing Officer for final income determination.

However, there is ambiguity as to who has the power u/s 263 to revise the order of the TPO passed u/s 92CA. Therefore, the FM proposes to amend the provisions of section 263 of the Income tax Act so as to provide that the Principal Chief Commissioner or the Chief Commissioner or the Principal Commissioner or Commissioner who is assigned the jurisdiction of transfer pricing may call for and examine the record of any proceeding under this Act, and if he considers that any order passed by the TPO, working under his jurisdiction, to be erroneous in so far as it is prejudicial to the interests of revenue, he may pass an order directing revision of the order of TPO.

Consequential changes are also be made in the provisions of section 153 of the Act inter alia to provide two months' time to the Assessing Officer to give effect to the order of TPO consequent to the directions in the revision order.