The present article is of importance to readers all around the globe including legal practitioners as it aims to provide an analysis of the recent ruling of the Hon’ble Madras High Court in the case of Virtusa Consulting Services Private Limited v. DCIT, Chennai. The Madras High Court had through this order expanded the scope of who is a “tested party” for the determination of arm’s length prices in controlled transactions. The High Court held that a foreign associated enterprise can be a tested party for the purpose of determining the arm’s length price.