Section 167 — Power of Board to make safe harbour rules. Successor to s.92CB of the 1961 Act.
Section 167 is in Chapter X — Special Provisions Relating to Avoidance of Tax, which runs from section 161 to section 177.
Sub-section (1) subjects two determinations to safe harbour rules: income referred to in section 9(2), and the arm's length price under section 165 or 166. Sub-section (2) empowers the Board to make rules for safe harbour. Sub-section (3) defines "safe harbour" as the circumstances in which the income-tax authorities shall accept the transfer price, or the income deemed to accrue or arise under section 9(2), as declared by the assessee.
It gives the Board power to fix in advance the circumstances in which a declared transfer price or a declared section 9(2) income will simply be accepted, removing those cases from dispute. The definition in sub-section (3) makes acceptance mandatory on the authorities once the circumstances are met.
The section carries no thresholds, margins or rates of its own — everything operative sits in the rules the Board makes under sub-section (2), so a safe harbour question is answered from those rules, not from the section. What the section does give you is the legal effect: where the rules are met, the authorities "shall accept" the figure you declared, so acceptance is not discretionary. It covers both transfer pricing under sections 165 and 166 and income deemed to accrue or arise under section 9(2).
A company declares an arm's length price for its intra-group services in its transfer pricing documentation and its case falls within the circumstances the Board's safe harbour rules prescribe. Sub-section (3) then does the work: the income-tax authorities 'shall accept' the transfer price as declared, so acceptance is not a matter of the officer's satisfaction and no determination under section 165 or 166 follows. Step outside those circumstances — because a margin or a category in the rules is not met — and the declaration loses that protection and the price goes back to ordinary determination. The margins and eligibility conditions are nowhere in this section: it carries no percentage of its own, only the rule-making power in sub-section (2), and the same machinery covers income deemed to accrue or arise under section 9(2).
Not through any notice of its own — a taxpayer meets it by opting into safe harbour in the manner the Board's rules prescribe, and meets its effect as the absence of a transfer pricing adjustment in the assessment. The section names the Board, which makes the rules, and the income-tax authorities, who must accept a declaration falling within them.
"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
See the full 1961 to 2025 concordance.
All of them are in the Rules 2026 index.
See the notifications index.
