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TMI Blog2023 (9) TMI 389X X X X Extracts X X X X X X X X Extracts X X X X ..... ervices. Similarly, insofar as Informed Technologies was concerned, the Tribunal notes that it provides financial research and data management services. More particularly, insofar as Informed Technologies is concerned, the Tribunal notes that it is a leading player in KPO services, which extend from financial content to financial industry. We are in agreement with the submissions of the counsel for the respondent/assessee that Rule 10(B)(2)(a) required that, when carrying out a comparability analysis of international transactions, with an uncontrolled transaction, the reference point should be, inter alia, the services provided by the entities which are being compared. Tribunal has, in our view, carried out that exercise. We may note that Mr Sharma, is perhaps, right to the extent that the Tribunal did not consider the analysis of operating margin vis-a-vis BNR, which the TPO had carried out. The difference in operating margins clearly arose because the respondent/assessee has included revenue and expenses from medical transcription services, which the TPO excluded, and thereby caused the difference between the operating margins in the period in issue and the average margi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not be accepted. 12. In place of the nine (9) comparables offered by the respondent/assessee, the TPO, inter alia, took into account the aforementioned three (3) comparables, i.e., Acropetal, BNR, and Informed Technologies, apart from (8) eight others. 13. Based on the recommendation of the TPO, a draft assessment order was passed by the AO under Section 143(3) of the Act, which was communicated to the respondent/assessee on 05.03.2016. 14. The respondent/assessee, being aggrieved, filed its objections with the Dispute Resolution Panel (DRP), inter alia, with regard to the aforementioned three (3) comparables which were considered by the TPO in recommending the upward transfer pricing adjustment. 15. The DRP, via its order dated 14.09.2016, partly allowed the objections filed by the respondent/assessee, and directed the TPO to reduce the transfer pricing adjustment on the basis of its findings . 16. Based on the DRPs order, the TPO submitted a fresh report with the AO on 30.09.2016, whereby, the transfer pricing adjustment was reduced from Rs. 6,11,78,279/- to Rs. 3,22,06,526/-. 17. Resultantly, the final assessment order was passed by the AO under Section 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by a coordinate bench of this Court in Rampgreen Solutions Pvt. Ltd. v. CIT, 2015:DHC:6421-DB. 28. We have heard the learned counsel for the parties and have perused the record. 29. Insofar as this appeal is concerned, we are called upon to consider whether any substantial question of law arises. In our view, having examined the record, what has come to the fore is that an appreciation of the material placed before the Tribunal has taken place. The Tribunal, thereafter, has come to a definitive conclusion that, the aforementioned three comparables were wrongly included by the TPO in recommending an upward transfer pricing adjustment. 30. For the sake of convenience, the relevant part of the Tribunal s order is set forth hereafter: Acropetal Technologies Ltd. This company is engaged in development of products for healthcare, energy and environment sectors within the healthcare segment . This company is operating as KPO service provider and is engaged in building, electronic, medical record. Further the company has integrated such EMRs with other aspects of patient life cycle such as drug and disease management and prescriptive and specialty medicine. Thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis that the company provided services in the healthcare division and also engaged in the business providing of KPO services. Similarly the Hon ble Tribunal in the case of Avaya India (P) Ltd. vs. ACIT in ITA No. 5528/Del/2011 directed to exclude the company holding that a medical transcription service cannot be compared with IT enabled service provider. In ITA 23/PN/2014 and ITA 1897 again in the case of BNY Mellon International Operations (India) (P.) Ltd. vs. DCIT and Xchanging Technology Services India (P) Ltd. vs. DCIT the Hon ble Tribunal has held that medical transcription services are functionally dissimilar to provision of BPO services. We further find that this comparable during the year under consideration had earned exceptionally higher operating margin at 40.62% which fact is apparent from the operating margin of the preceding and succeeding years wherein the average operating margin is 24.86%.The Hon'ble Tribunal in the case of Actis Advisors Pvt. Ltd. vs. DCIT in ITA No. 5277/Del/2011 has held that entities having high fluctuations in profit margins cannot be regarded as an appropriate comparable for the purpose of benchmarking analysis. In view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t/assessee. 34. Acropetal was rendering Knowledge Process Outsourcing (KPO) services. The Tribunal has said that it was engaged in medical transcription services, which compendiously has been given the name Electronic Medical Record. 35. Likewise, insofar as the BNR was concerned, the Tribunal once again returned the finding of fact that it was engaged in providing medical transcription services. 36. Similarly, insofar as Informed Technologies was concerned, the Tribunal notes that it provides financial research and data management services. More particularly, insofar as Informed Technologies is concerned, the Tribunal notes that it is a leading player in KPO services, which extend from financial content to financial industry. 37. We are in agreement with the submissions of the counsel for the respondent/assessee that Rule 10(B)(2)(a) required that, when carrying out a comparability analysis of international transactions, with an uncontrolled transaction, the reference point should be, inter alia, the services provided by the entities which are being compared. 38. The Tribunal has, in our view, carried out that exercise. We may note that Mr Sharma, is perhaps, right ..... X X X X Extracts X X X X X X X X Extracts X X X X
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