The assessee was a co-operative milk producers’ union. It entered into certain specified domestic transactions. For the assessment year 2014-15 it opted for safe harbour and applied in the prescribed format duly certified by the chartered accountant and filed the application along with the return of income. The AO  issued notice  The assessee referred to the Central Board of Direct Taxes Instruction No. 3, dated March 10, 2016 ([2016] 382 ITR (St.) 36) and submitted that it did not fall in any other criteria for making reference to the Transfer Pricing Officer and that if the Assessing Officer made a reference its objections might be called for before he made any reference to the Transfer Pricing Officer. The assessee wrote to the Principal Commissioner and contended that it had made an application to the Assessing Officer in connection with the domestic transfer pricing and that it had opted for safe harbour and requested to do the needful. The Transfer Pricing Officer issued a notice to the assessee to produce evidence in support of the computation of the arm’s length price in respect of its specified domestic transactions. The assessee submitted that it had opted for safe harbour and attached a copy of the application and requested the Transfer Pricing Officer to take it into account. Eventually, the Transfer Pricing Officer passed an order but did not make any adjustments for the arm’s length price of the assessee’s specified domestic transactions. On a writ  allowing the petition the Court held that that the Assessing Officer had no authority to make any reference under section 92CA to the Transfer Pricing Officer to ascertain the arm’s length price of the assessee’s specified domestic transactions. Therefore, the reference itself was invalid. The Board’s Instruction No.3, dated March 10, 2016, could not have and did not lay down anything to the contrary. The circular merely prescribed the circumstances under which the Assessing Officer would make reference to the Transfer Pricing Officer. Nowhere did the circular provide that as soon as such circumstances existed, the Assessing Officer would make a reference to the Transfer Pricing Officer, irrespective of the fact that the assessee had opted for safe harbour and such option was treated or deemed to be treated as validly exercised. Legally speaking, the Board could not have given any such directive. Eventually no such directive could be discerned from the circular. Court also held that  the assessee was an eligible assessee as specified in rule 10THA and the specified domestic transaction with respect to which the assessee had opted for safe harbour was eligible specified domestic transaction under rule 10THB . The Department had not pointed out anything to the contrary and it was not even the case of the Assessing Officer that the assessee had not satisfied the circumstances referred to in sub-rule (2) . Admittedly, after the assessee had exercised such an option, the Assessing Officer had passed no order under sub-rule (4) of rule 10THD declaring that the exercise of option was invalid and therefore, under sub-rules (7) and (8) of the rule, the option exercised by the assessee would be treated as valid. As a natural and necessary corollary the transfer pricing regime would not apply.( AY.2014-15)