1. On recommendations dated 4-5-2009 made by the Division Bench of this Tribunal. Hon’ble President has constituted this Special Bench. Initially the reference was made for deciding a particular question but pursuant to the request made by both the parties. Hon’ble President referred both the appeals in its entirety to be decided by the Special Bench. That is how we have come to in-seisin of matter.

2. These cross-appeals are directed against the order dated 28-11-2008 passed by learned CIT(A), Chandigarh in the matter of assessment under section 143(3) of the Income-tax Act, 1961 (in short ‘the Act’) for the assessment year 2004-05. The issue in dispute relates to the determination of Arm’s Length Price under section 92C(2) of the Act.

3. The relevant material facts are like this. The assessee before us is an Indian company which is a fully owned subsidiary of a Switzerland based company by the name of Quark Systems SARL, Switzerland (QSSS). If is a captive unit working exclusively for its parent company. On 1-4-2001, the assessee entered into a service contract with its parent company which, inter alia, provided that the assessee will render following technical services to the