9911796707
TMI Blog2022 (11) TMI 201X X X X Extracts X X X X X X X X Extracts X X X X ..... the directions issued by the Dispute Resolution Panel (DRP)-1, Mumbai ("learned DRP"), under section 144C(5) of the Act. 2. In its appeal, the assessee has raised following grounds:- "1. On the facts and circumstances of the case and in law, the final assessment order dated 21 February 2022 is non-est, as the same has been passed beyond the time prescribed by Section 144C(13) of the Act, thus liable to be quashed in-limine. 2. On the facts and circumstances of the case and in law, the learned Transfer Pricing Officer (TPO)/ the learned Assessing Officer (AO) under directions of the Hon'ble Dispute Resolution Panel ("DRP') erred in making an addition of Rs. 1,26,43,352/- to the total income of the Appellant on account of intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng receivables." 3. Ground No. 1, raised in present appeal, was not pressed during the course of hearing. Accordingly, the same is dismissed as not pressed. 4. The issue arising in grounds No. 2 - 5, raised in assessee's appeal, is pertaining to transfer pricing adjustment on account of outstanding receivables from its associated enterprise ("AE"). 5. The brief facts of the case pertaining to this issue, as emanating from the record, are: The assessee is engaged in provision of medical transcription services, information technology and quality assurance/support services in the nature of back office support services (ITeS). The assessee e-filed its return of income, for the year under consideration, on 30/11/2017 declaring total income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsaction pertaining to provision of medical transcription services is at ALP. 7. As regards IT and IT enabled services segment, the assessee used Transactional Net Margin Method ("TNMM") as the most appropriate method with Profit Level Indicator ("PLI") of Operating Profit to Total Operating Expenses, for benchmarking the transaction. By considering itself as the tested party, assessee identified 12 comparable companies with arithmetic mean of weighted adjusted net cost plus markup of 10.44%, with 35th and 65th percentile range between 7.40% to 9.47% and median of 8.31%. As the assessee has net cost plus margin of 19.62%, accordingly, it claimed the transaction pertaining to provision of IT and IT enabled services to be at ALP. 8. The Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taining to provision of medical transcription services, TPO computed total interest of Rs. 1,01,12,204 and in respect of provision of IT and ITeS, TPO computed total interest of Rs. 25,31,148. Thus, TPO proposed total upward adjustment of Rs. 1,26,43,352 as ALP interest to be charged by assessee to AE on outstanding trade receivables. The AO passed the draft assessment order under section 143(3) of the Act after incorporating the adjustment proposed by the TPO. 9. The assessee filed detailed objections before the learned DRP against the adjustment proposed by the TPO. The learned DRP vide its directions dated 23/12/2021, issued under section 144C(5) of the Act, rejected the objections filed by the assessee and upheld the approach of TPO of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rused the material available on record. In the present case, it is undisputed that international transactions undertaken by the assessee viz. provision of medical transcription services and provision of IT and IT enabled services are at arm's length as per the benchmarking analysis conducted by the assessee. The TPO proposed the impugned adjustment by calculating interest in respect of trade receivables outstanding from the AE. In this regard, the TPO considered 90 days as the credit period beyond which interest was calculated by applying average 6 months USD LIBOR plus 450 basis points. As per the assessee, outstanding receivables are pertaining to provision of medical transcription services and provision of IT and IT enabled services to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vis-à-vis comparable interest cost adjusted rate charged by the third-party vendors to the AE and thus no further adjustment, as made by TPO/AO and upheld by the learned DRP, is warranted. Accordingly, we direct the TPO/AO to delete the adjustment on account of outstanding receivables in respect of provision of medical transcription services. 13. As noted above, the transaction pertaining to provision of IT and IT enabled services was benchmarked by the assessee by adopting TNMM and margin of the assessee was found to be at arm's length vis-à-vis working capital adjusted margins of the comparables. From the record, it is evident that the TPO has also, inter-alia, accepted the benchmarking analysis conducted by the assessee i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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