Should a TA point out a professor's mistake while attending their lecture? I faced the following situation a few days back. I am doing my teaching assistance work under a professor. 

I attended one of his classes as a TA during which he was teaching some technically wrong stuff, which he assumed as true. Since most of the class were students of the course, they do not know which statements are correct and hence are not in position to rectify the professor's mistakes. 

There are more than five other TAs but no one pointed out the problem. I don't know whether the TAs know what is correct.

I stayed silent and observed whether anyone would point out the mistake but the class ended without anyone realizing the professor's mistake. The reason for my silence is this question.

Is it offensive to the professor to point out such mistakes? My question boils down to: Is it proper etiquette to point out mistakes that a professor makes during their lecture?
It depends on the type of mistake. All mistakes must get fixed to make sure the students don't learn anything wrong. However, how to best fix the mistake depends on the situation.

If it is a small mistake that can be fixed easily (e.g. a missing minus sign) I would recommend bringing it up on the spot. The 'cost' to the teacher and impact on the lecture is minimal but the benefit is potentially significant.

For more serious problems in a derivation/ argument like the one you described I think the cost benefit analysis often comes down in favor of waiting until the end of the lecture and informing the professor then. Then the professor can prepar a correction lecture explaining clearly what the mistake was and what the fix is. Trying to fix a mistake like the one you described on the fly can easily end up in a very chaotic lecture in which nothing is clear anymore and the students get very confused. 

In general, don't worry too much about politeness and etiquette but more about what's best for the students. Your job is to be the best teacher!