Appeal dismissed, CIT(A) decision upheld using CUP method for ALP determination. Rs. 6.73 crore addition deleted.

The appeal filed by the Revenue was dismissed, and the order of the Ld. CIT(A) was upheld, confirming that the Comparable Uncontrolled Price (CUP) method is the most appropriate method for determining the Arm's Length Price (ALP) in this case. The addition of Rs. 6.73 crores made by the AO was deleted.

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Issues Involved:
1. Adequate opportunity of being heard.
2. Addition of Rs. 6.73 crores to the value of international transactions.
3. Appropriate method for determining Arm's Length Price (ALP).

Summary:

1. Adequate Opportunity of Being Heard:
The assessee contended that the order u/s 92CA(3) was passed by the TPO without providing an adequate opportunity of being heard. The Ld. CIT(A) rejected this ground, stating that a fair and reasonable opportunity was given by the AO.

2. Addition of Rs. 6.73 Crores to the Value of International Transactions:
The assessee argued that the AO erred in making the addition of Rs. 6.73 crores to the value of international transactions for providing IT Enabled Services. The Ld. CIT(A) allowed this ground of appeal, holding that the price charged by the appellant for running call center services to its AEs is on an arm's length basis. The Ld. CIT(A) found that the data of specific companies engaged in voice-based service sectors showed billing rates in the range of US$ 10 to 13 per hour, and the appellant's effective rate was US$ 13.09 per hour, which is within that range. The Ld. CIT(A) also noted that the companies selected by the TPO/AO for arriving at ALP under TNMM were not comparable as they were engaged in different business activities.

3. Appropriate Method for Determining Arm's Length Price (ALP):
The Ld. Counsel for the assessee contended that the CUP method is the appropriate method to be adopted, supported by hourly rates published by NASSCOM and reports from M/s. Batliwala & Karani Securities Pvt. Ltd. The Ld. CIT(A) agreed, stating that the Comparable Uncontrolled Method (CUP) followed by the assessee company is the most appropriate method. The Ld. CIT(A) found that the TPO's selection of companies was not comparable and that the TPO's margin calculation was incorrect. The Ld. CIT(A) thus deleted the addition made of Rs. 6.73 crores by making adjustments u/s 92.

Conclusion:
The appeal filed by the Revenue was dismissed, and the order of the Ld. CIT(A) was upheld, confirming that the CUP method is the most appropriate method for determining ALP in this case. The addition of Rs. 6.73 crores made by the AO was deleted.

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