2020 (11) TMI 1093

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....l transaction. 3. Assessee Transcend MT services private limited, (the appellant,) has also filed cross objection in CO number 49/del/2016 against the order of the learned assessing officer raising several grounds of cross objections. 4. The learned assessing officer in ITA number 6200/Del/2015 has raised the following grounds of appeal:- "1. "On the facts and in the circumstances of the case, the DRP-II erred in directing to reduce the addition of Rs.4,83,59,544/- on account of proposed addition of arm's length price of the international transaction with its associated enterprises." 2. "On the facts and in the circumstances of the case, the DRP-II erred in directing TPO to exclude 5 mentioned below companies from the final set of comparables : i) Accentia Technologies Ltd. ii) Acropetal Technologies Ltd. iii) Eclerx Services Ltd. iv) Infosys BPO Ltd. v) TCS E-Serve Ltd." 5. The assessee has raised the following grounds of appeal in cross objection number 49/del/2016"- "1. That on the facts and circumstances of the case and in law, the present appeal is not maintainable and non-est as it does not comply with the provisions of section 253(6) of the Act. ....

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....he medical transcription services provided by it. During the year the assessee entered into a international transaction of medical transcription services provided its associated enterprise amounting to Rs. 336,320,776/- . Assessee benchmarked the same by adopting the Transactional Net Margin Method as the Most Appropriate Method adopting the Profit Level Indicator of Operating Profit/Total Cost. Assessee has selected comparable companies whose weighted average margin was 11.65% and assessee worked out its own margin to be 15% and stated that the international transactions entered into by it are at arm'slength. 7. The case of the assessee was referred to the learned Transfer Pricing Officer for examination of arm's-length price of the international transactions. Therefore the learned TPO i.e. The Additional Commissioner Of Income Tax, Transfer Pricing Officer - 3 (2), New Delhi examined the same and rejected the filters adopted by the assessee as well as the comparable companies selected by the assessee and its accept/ reject metrics. He considered all the seven comparable selected by the assessee and found them not a suitable comparable. Therefore he carried out his own search and....

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....ricing officer with respect to all the above five comparables which are held to be not comparable by the learned dispute resolution panel. 11. The learned authorised representative in support of the order of the learned Dispute Resolution Panel has submitted a detailed chart wherein he tried to justify that the order of the learned Transfer Pricing Officer in including the above comparables in the comparability analysis has rightly been considered by the learned Dispute Resolution Panel and has directed the learned Transfer Pricing Officer to exclude them. Therefore it was stated that there is no infirmity in the direction of the Dispute Resolution Resolution Panel. 12. We have carefully considered the rival contention. Coming to the first comparable Accentia technologies Ltd we find that the learned Dispute Resolution Panel has excluded this comparable by following the decision in case of Telecordia technologies India private limited (ITA number 7821/MU M/2011 and host of other rulings. The learned Dispute Resolution Panel in its direction has also given a finding in paragraph number 4 that this comparable is engaged in software development and also into product sales hence not ....

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....lopment of software or not. This comparable has been selected by the learned Transfer Pricing Officer and therefore he should have brought on record necessary details to show that this company is not engaged in development of the software but in the similar kind of functions as performed by the assessee. For this reason , we do not find any infirmity in the order of the learned Dispute Resolution Panel in directing the learned TPO to exclude this comparable company. Thus, direction of the learned Dispute Resolution Panel with respect to exclusion of this comparable is upheld. 14. With respect to other three comparable companies E Clrex Services Limited, Infosys BPO Ltd and TCS E Serve Ltd the learned Dispute Resolution Panel has directed the learned transfer pricing officer to exclude these comparable. With respect to E Clrex services Ltd it is held that this company is functionally not comparable as it has diverse functionality of high-end business. This fact was examined by us by looking at the annual account submitted by the assessee at page number 432 - 559 of the paper book standalone financial statements are available at page number 56 (page number 433 of the paper book) of ....