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TMI Blog2015 (1) TMI 302X X X X Extracts X X X X X X X X Extracts X X X X ..... agreements between the assessee and its AE as well as the agreements entered into by the AE with the other Indian companies and the agreements between the assessee and its other overseas customers - the price charged by the assessee to its AE on each line of medical transcription work at 0.063 US$ is almost equal to the similar rate charged per line on medical transcription work by the other uncontrolled parties, considered as comparable by the assessee - The observation of the TPO that the comparables cannot be considered to be uncontrolled is without any basis, and it is based on mere presumptions and surmises - When the comparables considered by the assessee are in no way connected either with the assessee or with its holding company, and all the information/data relating to their transactions are available, the TPO was not justified in rejecting the computation of ALP made by the assessee by applying the CUP method - CIT(A) has passed a well reasoned order, and ultimately came to a conclusion that the CUP method is the most appropriate method for computing the ALP for the international transactions entered into by the assessee with its AE – Decided against revenue. - ITA No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er consideration, details of internal comparables were available. The AE also procures the same services i.e. medical transcription services from third parties in India as are procured from CKar. (iii) The functions performed by the independent third parties DHS and Saral for providing medical transcription services to CSSI are same as those performed by CKar for CSSI. Since the nature of medical transcription services procured from all these third parties is identical and also the terms and conditions as well as the rates charged by all these third parties to CSSI are identical, hence for the purpose of determining the arm's length price, we have taken DHS and Saral as sample comparable companies. (iv) CSSI paid 5 cents per line till December 31, 2007 and 5.5. cents per line typed form January 1, 2008 for receipt of identical medical transcription services, to the independent third parties whereas it paid CKar an annual average of 7 cents per line (subject to adherence of quality standards). (v) Since the rates paid by CSSI to CKar are greater than those paid to independent third parties in India, therefore it was reasonably concluded that the international transactio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee received US $ 0.064 per line. Since this is higher than what is received by independent parties, the same should be considered at arm's length. (c) That the Transfer Pricing Officer stated that price paid by AE depends on the quality of services, however, the work of medical transcription does not require high quality standards. Basic qualification for medical transcriptionist is to know English language and certain medical terms and converting the dictation given by the doctors in USA in written form which does not require very high skills. The quality of work rendered by all third parties enterprises is the same. (d) The rate paid by AE does not depend on quantum of work. Rate is paid on per line basis and has nothing to do with quantum of work. (e) That the appellant is not in the business of product development software as presumed by the Transfer Pricing Officer. The appellant is in medical transcription services which has nothing to do with product development software. (f) That the CUP Method should be accepted as independent internal comparables are available rendering the services to AE in exactly identical circumstances. 4. The learned Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mparables and three internal comparables. The external comparables the two Indian companies, M/s. ELICO Limited and M/s. Shaster Technologies Ltd. have also entered into agreements with M/s. CBay Systems Ltd. USA for providing medical transcription services. Similarly, the assessee has also entered into agreement with three overseas customers (internal comparables) for providing medical transcription services similar to the ones provided by assessee to its AE. As can be seen from the price charged by the assessee to its AE, in comparison with the price charged by the assessee to its other overseas customers, so also by the price charged by the other two Indian companies, viz. ELICO Ltd and Shaster Technologies P. Ltd. to M/s. CBay Systems, USA, it is clear that they are almost within similar range. The service rendered by the assessee to its AE as well as to the other overseas customers and the services rendered by the other two Indian companies to CBay systems is also same, i.e. medical transcription work. Therefore, the comparables adopted by the assessee are uncontrolled parties and can be considered for the purpose of determining the Arms' Length Price as per CUP method. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces rendered to CBay Systems USA and also the services rendered by the assessee to the overseas customers. On perusing services rendered and price charged for all the aforesaid transactions, it is seen that the price charged by the assessee to its AE on each line of medical transcription work at 0.063 US$ is almost equal to the similar rate charged per line on medical transcription work by the other uncontrolled parties, considered as comparable by the assessee. The observation of the TPO that the comparables cannot be considered to be uncontrolled is without any basis, and it is based on mere presumptions and surmises. When the comparables considered by the assessee are in no way connected either with the assessee or with its holding company, and all the information/data relating to their transactions are available, the TPO was not justified in rejecting the computation of ALP made by the assessee by applying the CUP method. The CIT(A) has passed a well reasoned order, elaborately discussing the various issues raised by the TPO and ultimately came to a conclusion that the CUP method is the most appropriate method for computing the ALP for the international transactions entered int ..... X X X X Extracts X X X X X X X X Extracts X X X X
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