Orbinox India Private Limited, Coimbatore V. DCIT, Coimbatore

ITA 454/CHNY/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8610 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 09-06-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 06-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR MILIND MADHUKAR BHUSARI
• Keywords: Transfer pricing; International transaction; Wholly owned subsidiary

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.454/MDS/2015 ( )( / ASSESSMENT YEAR : 2010-11 M/S ORBINOX INDIA PVT. LTD., SF NO.608/3A2B, 608/3A1B, ECHANERI CHETTIPALAYAM ROAD, ECHANERI POST, COIMBATORE - 641 021. PAN : AAACO 5826 A V. THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 1, COIMBATORE. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SH. SP. CHIDAMBARAM, ADVOCATE -.+, / 0 / RESPONDENT BY : DR. MILIND MADHUKAR BHUSARI, C IT 1 / 2% / DATE OF HEARING : 09.06.2016 3') / 2% / DATE OF PRONOUNCEMENT : 01.09.2016 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE ASSESSING OFFICER, CONSEQUENT TO THE DIRECTIONS OF DISPUTE RESOLUTION PANEL, CHENNAI, DATED 26.11.2014 AND PER TAINS TO ASSESSMENT YEAR 2010-11. 2 I.T.A. NO.454/MDS/15 2. SH. SP. CHIDAMBARAM, THE LD.COUNSEL FOR THE ASSE SSEE, SUBMITTED THAT THE ASSESSEE-COMPANY IS ENGAGED IN T HE BUSINESS OF MANUFACTURING AND SALE OF KNIFE GATE VALVES, LEVEL TRANSMITTERS AND SOLUTIONS TO ITS CUSTOMERS IN INDIA FOR APPLICATION OF ENERGY AND PROCESS CONTROL INDUSTRIES. ACCORDING TO THE LD. C OUNSEL, KNIFE GATE VALVES CONSTITUTE AROUND 98% OF TOTAL REVENUE OF TH E ASSESSEE- COMPANY. THE OTHER PRODUCTS CONSTITUTE ONLY 2% OF THE TOTAL REVENUE. THE ASSESSEE MARKETS ITS PRODUCTS UNDER T HE BRAND NAME ORBINOX. THE LD.COUNSEL FURTHER SUBMITTED THAT T HE ASSESSEE IS A WHOLLY OWNED SUBSIDIARY OF OVI, SPAIN. 3. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT D URING THE YEAR UNDER CONSIDERATION, THE ASSESSEE IMPORTED RAW MATERIAL AND COMPONENTS. THE ASSESSEE HAS ALSO SOLD FINISHED PR ODUCTS IN DOMESTIC MARKET AND ALSO EXPORTED THE SAME TO ITS A SSOCIATE ENTERPRISES OUTSIDE THE COUNTRY. THE ASSESSEE HAS ALSO PAID INTEREST ON EXTERNAL COMMERCIAL BORROWINGS. THE LD .COUNSEL FURTHER SUBMITTED THAT THE ASSESSEE HAS PAID ROYALTY TO ITS PARENT COMPANY. IN RESPECT OF EXPORT MADE TO ASSOCIATE ENTERPRISES OUTSIDE THE COUNTRY, THE ASSESSEE ADOPTED TRANSACTION NET MARGI N METHOD AS MOST APPROPRIATE METHOD FOR COMPUTATION OF ARM'S LE NGTH PRICE. 3 I.T.A. NO.454/MDS/15 HOWEVER, THE TRANSFER PRICING OFFICER ADOPTED COST PLUS METHOD AS MOST APPROPRIATE METHOD. ACCORDING TO THE LD. COUN SEL, THE ASSESSEE SOLD THE SAME PRODUCT TO ITS ASSOCIATE ENT ERPRISES OUTSIDE THE COUNTRY AS WELL AS THIRD PARTIES IN THE DOMESTI C MARKET. THEREFORE, ACCORDING TO THE LD. COUNSEL, THE TWO SE T OF TRANSACTIONS ARE NOT COMPARABLE. HENCE, THE COST PLUS METHOD CA NNOT BE THE MOST APPROPRIATE METHOD. ACCORDING TO THE LD. COUN SEL, FOR THE PURPOSE OF COST PLUS METHOD, THERE MUST BE COMPARAB LE LINE OF TRANSACTION. COMPARISON OF EXPORT TRANSACTION WITH DOMESTIC SEGMENT FOR DETERMINATION OF ARM'S LENGTH PRICE IS NOT CORRECT. ACCORDING TO THE LD. COUNSEL, EXPORT OF GOODS TO AS SOCIATE ENTERPRISES BY THE ASSESSEE AND SALE OF SAME GOODS IN THE DOMESTIC MARKET ARE TWO DIFFERENT SEGMENTS OF THE A SSESSEE AND, THEREFORE, THE SAME CANNOT BE COMPARED. 4. SH. SP. CHIDAMBARAM, THE LD.COUNSEL FOR THE ASSE SSEE, FURTHER SUBMITTED THAT IN THE EXPORT SEGMENT, THE A SSESSEE HAS NOT TAKEN ANY PAIN FOR MARKETING. THE SAME PRODUCTS, W HICH ARE SOLD IN THE DOMESTIC MARKET, REQUIRE MUCH EFFORT FOR MARKET ING. IN THE CASE OF EXPORT BUSINESS, ACCORDING TO THE LD. COUNSEL, T HE SAME WAS MADE TO GROUP COMPANIES OUTSIDE THE COUNTRY WHILE S ELLING THE 4 I.T.A. NO.454/MDS/15 SAME IN OVER 70 COUNTRIES AND GOODS SOLD IN EXPORT MARKET IS VERY HIGH VOLUME. THE ASSESSEE IS NOT EXPECTED TO GIVE ANY WARRANTY TO THE GOODS SOLD OUTSIDE THE COUNTRY. THE GROUP COMP ANIES, WHICH ARE BORROWING THE GOODS FROM THE ASSESSEE, PROVIDED AFTER SALES WARRANTY. IN THE CASE OF DOMESTIC SALES, ACCORDING TO THE LD. COUNSEL, THE ASSESSEE HAS TO PROVIDE AFTER SALES WA RRANTY. BUSINESS DEVELOPMENT IS THE KEY FUNCTION WHICH LEAD S TO INCREASE THE DOMESTIC SALES. THE PRODUCTS SOLD UNDER DOMEST IC MARKET ARE UNIQUE TO THE REQUIREMENT OF CUSTOMERS. SPECIFICAT IONS ARE COMPLICATED AND VARIETIES ARE TOO MANY. THEREFORE, ACCORDING TO THE LD. COUNSEL, SUCH PRODUCTS CANNOT BE COMPARED T O THE PRODUCTS WHICH ARE SOLD IN THE EXPORT MARKET. THE LD.COUNSE L FURTHER SUBMITTED THAT ONLY LIMITED VOLUME OF GOODS ARE SOL D IN THE INDIAN MARKET, THEREFORE, THE TWO SEGMENTS CANNOT BE COMPA RED AT ALL. REFERRING TO THE DECISION OF PUNE BENCH OF THIS TRI BUNAL IN ALFA LAVAL (I) LTD. V. DCIT (2014) 46 TAXMANN.COM 394, T HE LD.COUNSEL SUBMITTED THAT WHEN THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SALE OF INDUSTRIAL PRODUCTS IN EX PORT SEGMENT AND DOMESTIC SEGMENT, THE TPO WAS NOT JUSTIFIED IN ADOP TING COST PLUS METHOD AS MOST APPROPRIATE METHOD IN ORDER TO MAKE ADJUSTMENT TO THE ASSESSEES ARM'S LENGTH PRICE IN RESPECT OF INT ERNATIONAL 5 I.T.A. NO.454/MDS/15 TRANSACTION ENTERED WITH ASSOCIATE ENTERPRISES. TH EREFORE, ACCORDING TO THE LD. COUNSEL, THE ADJUSTMENT MADE B Y THE TPO BY FOLLOWING COST PLUS METHOD AS CONFIRMED BY DISPUTE RESOLUTION PANEL IS NOT JUSTIFIED. 5. ON THE CONTRARY, DR. MILIND MADHUKAR BHUSARI, TH E LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASS ESSEE ADOPTED TRANSACTION NET MARGIN METHOD AS MOST APPROPRIATE M ETHOD. HOWEVER, THE TRANSFER PRICING OFFICER FOUND THE COS T PLUS METHOD WOULD BE THE MOST APPROPRIATE METHOD. COST PLUS ME THOD IS ABOUT COMPARING THE MARK-UP EARNED ON THE COST BY THE ASS ESSEE- COMPANY WITH THAT OF THE COMPARABLES AFTER GIVING N ECESSARY ADJUSTMENTS TO NULLIFY THE DIFFERENCES BETWEEN THE TESTED PARTY AND THE COMPARABLES. ACCORDING TO THE LD. D.R., THE AS SESSEE HAD TWO TANGIBLE SEGMENTS, NAMELY, ASSOCIATE ENTERPRISES AN D NON- ASSOCIATE ENTERPRISES. THEREFORE, COMPARISON OF IN TERNATIONAL SEGMENT WAS MADE IN THE PRESENT CASE, AFTER GIVING NECESSARY ADJUSTMENT, THE GROSS PROFIT MARK-UP ADJUSTED WAS 3 7.29% IN THE AE SEGMENT AND IT WAS 65.14% IN THE NON-AE SEGMENT. A CCORDING TO THE LD. D.R., THE DATA REGARDING BOTH THE SEGMENTS WERE AVAILABLE WITH THE ASSESSEE FOR ENTIRE PERIOD. THE ASSESSEE SOLD THE 6 I.T.A. NO.454/MDS/15 MANUFACTURED PRODUCTS TO ITS ASSOCIATE ENTERPRISES BELOW THE ARM'S LENGTH PRICE AND THEREBY VIOLATED THE TRANSFER PRIC ING NORMS. THEREFORE, ACCORDING TO THE LD. D.R., THE TRANSFER PRICING OFFICER MADE ADJUSTMENT BY FOLLOWING COST PLUS METHOD. 6. REFERRING TO THE TRAVEL EXPENSES DEBITED TO PROF IT & LOSS ACCOUNT TO THE EXTENT OF ` 29,73,052/-, THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE-COMPANY CLAIMED A SUM OF ` 28,00,563/- AS APPLICABLE TO THE DOMESTIC TRANSACTI ON AND REQUESTED TO ADJUST THE ENTIRE SUM OF ` 28,00,563/- IN THE NON-AE SEGMENT. THE LD. D.R. FURTHER SUBMITTED THAT THE E NTIRE EXPENDITURE INCURRED IN A PARTICULAR SEGMENT CANNOT BE ADJUSTED WITH OTHER SEGMENT. ALL THE DOMESTIC TRAVELS ARE GROUPED UNDE R NON-AE SEGMENT AND MOST OF THE ABROAD VISITS ARE GROUPED U NDER AE SEGMENT. THEREFORE, THE TRAVEL EXPENSES INCURRED I N DOMESTIC MARKET CANNOT BE ADJUSTED WITH EXPORT SEGMENT. THE LD. D.R. FURTHER SUBMITTED THAT BOTH THE EXPORT SEGMENT AND DOMESTIC SEGMENT ARE COMPARABLE ONE, THEREFORE, THE ASSESSIN G OFFICER BY RIGHTLY COMPARING BOTH THE SEGMENTS, MADE ADJUSTMEN T TOWARDS ARM'S LENGTH PRICE. 7 I.T.A. NO.454/MDS/15 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSEE EXPORTED THE MANUFACTURED GOODS TO ITS ASSOCIATE EN TERPRISES OUTSIDE THE COUNTRY AND THE SAME WAS SOLD IN THE DO MESTIC MARKET TO NON-AES. THE ASSESSEE PREPARED THE TRANSFER PRI CING DOCUMENTS BY ADOPTING TRANSACTION NET MARGIN METHOD AS MOST A PPROPRIATE METHOD. HOWEVER, THE TRANSFER PRICING OFFICER TOOK THE COST PLUS METHOD AS MOST APPROPRIATE METHOD. FOR ADOPTING MO ST APPROPRIATE METHOD, IT IS NECESSARY TO FIND OUT THE METHOD WHICH SUITS TO THE FACTS AND CIRCUMSTANCES OF THE PARTICU LAR INTERNATIONAL TRANSACTION. IN RESPECT OF TRANSACTION NET MARGIN METHOD, THE NET PROFIT MARGIN REALIZED BY THE ENTERPRISE FROM AN IN TERNATIONAL TRANSACTION ENTERED INTO WITH AN ASSOCIATE ENTERPRI SE IS COMPUTED IN RELATION TO COSTS INCURRED OR SALES EFFECTED OR ASS ETS EMPLOYED OR TO BE EMPLOYED BY THE ENTERPRISE OR HAVING REGARD TO A NY OTHER RELEVANT BASE NEEDS TO BE CONSIDERED. THE NET PROF IT MARGIN REALISED SHALL BE TAKEN INTO ACCOUNT TO ARRIVE AT T HE ARM'S LENGTH PRICE IN RELATION TO INTERNATIONAL TRANSACTIONS. 8. IN THE CASE OF COST PLUS METHOD, THE DIRECT AND INDIRECT COSTS OF PRODUCTION INCURRED BY THE ENTERPRISE IN RESPECT OF THE PROPERTY 8 I.T.A. NO.454/MDS/15 TRANSFERRED OR SERVICES RENDERED NEEDS TO BE DETERM INED. THE AMOUNT OF NORMAL GROSS PROFIT MARK-UP TO SUCH COSTS ARISING FROM THE TRANSFER OF SIMILAR PROPERTY BY THE ENTERPRISE OR BY AN UNRELATED ENTERPRISE IN A COMPARABLE UNCONTROLLED TURNOVER OR NUMBER OF SUCH TRANSACTIONS, NEEDS TO BE DETERMINED. THE SUM SO A RRIVED HAS TO BE TAKEN AS ARM'S LENGTH PRICE IN RELATION TO SUPPL Y OF PROPERTY OR PROVISION OF SERVICES BY THE ENTERPRISE. THEREFORE , A BARE READING OF RULE 10B(1)(C) PROVIDED FOR ARM'S LENGTH PRICE BY A DOPTING COST PLUS METHOD SHOWS THAT INDIRECT AND DIRECT COST OF PRODU CTION NEEDS TO BE DETERMINED BESIDES NORMAL PROFIT MARK-UP TO SUCH COSTS. THE NORMAL MARK-UP TO THE COSTS NEED TO BE ADJUSTED TO THE FUNCTIONAL AND OTHER DIFFERENCES, IF ANY, BETWEEN INTERNATIONA L TRANSACTION AND COMPARABLE UNCONTROLLED TRANSACTION. 9. IN THE CASE BEFORE US, THE TRANSFER PRICING OFFI CER HAS TAKEN COMPARABLE TRANSACTION OF THE ASSESSEE IN THE DOMES TIC MARKET. THE TRANSFER PRICING OFFICER HAS NOT TAKEN ANY PAIN TO COMPARE THE TRANSACTION IN AN UNCONTROLLED TRANSACTION. AS RIG HTLY SUBMITTED BY THE LD.COUNSEL FOR THE ASSESSEE, WHEN THE GOODS ARE EXPORTED TO ASSOCIATE ENTERPRISES OUTSIDE THE COUNTRY, NO MARKE TING EFFORT NEEDS TO BE DONE. THE ASSOCIATE ENTERPRISES PURCH ASED PRODUCTS 9 I.T.A. NO.454/MDS/15 FROM THE ASSESSEE AND THEY SOLD THE SAME. IT IS NO T IN DISPUTE THAT THE ASSOCIATE ENTERPRISES PURCHASED THE GOODS FROM THE ASSESSEE FOR SELLING THE PRODUCTS OVER 70 COUNTRIES. FOR TH E PURPOSE OF DETERMINATION OF COST PLUS METHOD, ONE OF THE CONDI TIONS REQUIRED IS NORMAL MARK-UP PROFIT IN THE COMPARABLE UNCONTROLLE D TRANSACTIONS. FROM THE ORDERS OF THE LOWER AUTHORITIES AND THE WR ITTEN SUBMISSION FILED BY THE ASSESSEE, IT APPEARS THE PRODUCTS SOLD IN THE EXPORT MARKET IS DIFFERENT FROM THE ONE WHICH WAS SOLD IN THE DOMESTIC MARKET. IN THE DOMESTIC MARKET, THE ASSESSEE HAS P ROVIDED EXTENSIVE AFTER SALE SERVICE SUPPORT, REPLACEMENT O F GOODS, SERVICING, INSTALLATION, ETC. BESIDES EXTENSIVE MAR KETING AND SALES EFFORT. WHEREAS, IN THE CASE OF EXPORT SEGMENT, TH E SPECIFICATIONS OF THE PRODUCTS SOLD ARE TOTALLY DIFFERENT. THE ASSES SEE HAS NOT MADE ANY EFFORT FOR MARKETING ITS PRODUCTS AND THE ASSES SEE HAS NOT PROVIDED ANY AFTER SALES SERVICE SUPPORT. IT ALSO APPEARS THAT IN THE DOMESTIC MARKET, THE PRODUCTS ARE UNIQUE TO THE CUS TOMERS REQUIREMENT. IN VIEW OF THE VARIATIONS IN THE SPEC IFICATIONS OF THE PRODUCTS EXPORTED BY THE ASSESSEE AND SOLD IN THE D OMESTIC MARKET, PRIMA FACIE, IT APPEARS THE SAME PRODUCTS CANNOT BE FUNCTIONALLY COMPARED. FOR THE PURPOSE OF SELECTING THE MOST AP PROPRIATE 10 I.T.A. NO.454/MDS/15 METHOD, THE FOLLOWING SHALL BE TAKEN INTO CONSIDERA TION AS SPECIFIED IN RULE 10C(2) OF INCOME-TAX RULES, 1962 WHICH READ S AS FOLLOWS:- (A) THE NATURE AND CLASS OF THE INTERNATIONAL TRANSACTI ON; (B) THE CLASS OR CLASSES OF ASSOCIATE ENTERPRISES ENTER ING INTO THE TRANSACTION AND THE FUNCTIONS PERFORMED BY THEM TAKING INTO ACCOUNT ASSETS EMPLOYED OR TO BE EMPLOYED AND RISKS ASSUMED BY SUCH ENTERPRISES; (C) THE AVAILABILITY, COVERAGE AND RELIABILITY OF DATA NECESSARY FOR APPLICATION OF THE METHOD; (D) THE DEGREE OF COMPARABILITY EXISTING BETWEEN THE INTERNATIONAL TRANSACTION AND THE UNCONTROLLED TRANSACTION AND BETWEEN THE ENTERPRISES ENTERING INTO SUCH TRANSACTIONS; (E) THE EXTENT TO WHICH RELIABLE AND ACCURATE ADJUSTMENTS CAN BE MADE TO ACCOUNT FOR DIFFERENCES, IF ANY, BETWEEN THE INTERNATIONAL TRANSACTION AND T HE COMPARABLE UNCONTROLLED TRANSACTION OR BETWEEN THE ENTERPRISES ENTERING INTO SUCH TRANSACTIONS; (F) THE NATURE, EXTENT AND RELIABILITY OF ASSUMPTIONS REQUIRED TO BE MADE IN APPLICATION OF A METHOD. ONE OF THE FACTORS TO BE TAKEN INTO CONSIDERATION I S THE NATURE AND CLASS OF THE INTERNATIONAL TRANSACTION. THE AVAILA BILITY, COVERAGE AND RELIABILITY OF DATA NECESSARY FOR APPLICATION OF ME THOD. IN THE CASE BEFOR US, BOTH, THE TRANSFER PRICING OFFICER AS WEL L AS THE DISPUTE RESOLUTION PANEL HAVE NOT TAKEN INTO CONSIDERATION THE FACTORS WHICH ARE REQUIRED TO BE CONSIDERED AS PROVIDED IN RULE 10C OF INCOME-TAX RULES, 1962 FOR THE PURPOSE OF DETERMINI NG THE MOST APPROPRIATE METHOD. FURTHERMORE, THE FUNCTIONAL SI MILARITY IS ONE OF THE MOST RELEVANT FACTORS FOR THE PURPOSE OF DETERM INING THE ARM'S 11 I.T.A. NO.454/MDS/15 LENGTH PRICE. WHEN THE ASSESSEE CLAIMS THAT THE PR ODUCTS EXPORTED AND SOLD IN DOMESTIC MARKET ARE OF DIFFERENT SPECIF ICATIONS, THE SAME HAS TO BE TAKEN INTO CONSIDERATION BY THE AUTHORITI ES BELOW. MOREOVER, THE PUNE BENCH OF THIS TRIBUNAL IN ALFA L AVAL (I) LTD. (SUPRA) FOUND THAT WHEN THE MANUFACTURED GOODS ARE EXPORTD AND ALSO SOLD IN THE DOMESTIC MARKET, THE TPO WAS NOT J USTIFIED IN ADOPTING COST PLUS METHOD AS MOST APPROPRIATE METHO D. 10. THE TRANSFER PRICING OFFICER HAS COMPARED THE T RANSACTION OF THE ASSESSEE WITH ASSOCIATE ENTERPRISES OUTSIDE THE COUNTRY WITH THE TRANSACTION MADE BY THE ASSESSEE IN DOMESTIC MA RKET. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ARM' S LENGTH PRICE REQUIRED TO BE DETERMINED IS IN RESPECT OF THE TRAN SACTION MADE BY THE ASSESSEE WITH ASSOCIATE ENTERPRISES OUTSIDE THE COUNTRY. THEREFORE, IT IS FOR THE TRANSFER PRICING OFFICER T O FIND OUT A SIMILAR TRANSACTION IN UNCONTROLLED MARKET OF THE SIMILAR P RODUCTS IN THE EXPORT MARKET. COMPARISON OF DOMESTIC MARKET WITH EXPORT TRANSACTION MAY NOT BE JUSTIFIED. THE CLIMATIC CON DITION IN THE DOMESTIC MARKET IS TOTALLY DIFFERENT FROM THE CLIMA TIC CONDITION OF EXPORT MARKET. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE SALE IN THE DOMESTIC MARKET CANNOT BE COMP ARED WITH SALES 12 I.T.A. NO.454/MDS/15 MADE IN THE EXPORT MARKET. THE SALE IN THE EXPORT MARKET MUST BE COMPARED WITH SALES MADE IN THE EXPORT MARKET BY SI MILARLY PLACED COMPANIES IN AN UNCONTROLLED TRANSACTION. THE TRA NSFER PRICING OFFICER HAS NOT TAKEN EFFORT TO COMPARE THE TESTED PARTY WITH EXPORT TRANSACTION MADE IN AN UNCONTROLLED TRANSACTION. S INCE SUCH AN EFFORT WAS NOT MADE EITHER BY THE TRANSFER PRICING OFFICER OR BY THE DISPUTE RESOLUTION PANEL, THIS TRIBUNAL IS OF THE C ONSIDERED OPINION THAT THE MATTER NEEDS TO BE RECONSIDERED. ACCORDIN GLY, THE ORDERS OF THE AUTHORITIES BELOW ARE SET ASIDE AND THE ENTIRE ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASS ESSING OFFICER SHALL MAKE A REFERENCE AGAIN TO THE TRANSFER PRICIN G OFFICER. ON SUCH REFERENCE, THE TRANSFER PRICING OFFICER SHALL EXAMINE THE EXPORT SEGMENT OF THE ASSESSEE IN RELATION TO ITS T RANSACTION WITH ASSOCIATE ENTERPRISES AND THE TRANSACTION OF SIMILA RLY PLACED COMPANIES WITH SIMILAR PRODUCTS IN THE EXPORT MARKE T IN AN UNCONTROLLED TRANSACTION AND THEREAFTER DETERMINE T HE ARM'S LENGTH PRICE IN ACCORDANCE WITH LAW. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 13 I.T.A. NO.454/MDS/15 ORDER PRONOUNCED ON 1 ST SEPTEMBER, 2016 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 1 ST SEPTEMBER, 2016. KRI. / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. THE ITO (HQRS) (INTERNATIONAL TAXATION), CHEN NAI 4. TPO V, CHENNAI 5. 79 -2 /DR 6. ( : /GF.