Optum Global Solutions (India) Pvt. Ltd Vs. ACIT, New Delhi

This Income Tax Appellate Tribunal (ITAT) case involves Optum Global Solutions (India) Pvt. Ltd. appealing against assessment orders for the 2013-14 financial year. The core issues revolve around transfer pricing adjustments and corporate tax additions made by the Assessing Officer and Dispute Resolution Panel. Optum argues that the assessment order was invalid as it was issued in the name of a defunct entity and disputes the transfer pricing adjustments, particularly those related to notional interest on inter-company receivables.

IN THE INCOME TAX APPELLATE TRIBUNAL
(DELHI BENCH ‘I-2’ : NEW DELHI)
 (THROUGH VIDEO CONFERENCE)
BEFORE SHRI N.K.BILLAIYA, ACCOUNTANT MEMBER
and
SHRI KULDIP SINGH, JUDICIAL MEMBER
ITA No.6665Del./2017
(Assessment Year : 2013-14)

Optum Global Solutions (India) Pvt. Ltd. 
(As successor of United Health Group
information services Pvt. Ltd.) 
5th, 6th and 7th Office Level,
Hitech City, Madhapur,
Hyderabad- 500 081,
Telangana
 (PAN : AAACQ2188G)
 (APPELLANT)

Vs. 
ACIT
 Special Range-9
New Delhi
 (RESPONDENT)
 
ASSESSEE BY: Shri Nageshwar Rao, Adv.
 REVENUE BY: Shri Anupham Kant Garg, CIT-DR
 
Date of Hearing: 27.08.2020
 Date of Order: 29 .09.2020

O R D E R
PER KULDIP SINGH, JUDICIAL MEMBER

 Appellant, M/s. Optum Global Solutions (India) Pvt. Ltd. (hereinafter referred to as ‘taxpayer’) by filing the present appeal sought to set aside the impugned order dated 30.08.2017 passed by the Assessing Officer (AO) in consonance with the  orders passed by the ld. DRP/TPO under section 254/143 (3) read with section 144C of the Income-tax Act, 1961 (for short ‘the Act’) qua the assessment year 2013-14 on the grounds inter alia that :-

1. That on the facts of the case and in law, the final assessment order passed by the Additional Commissioner of Income Tax,
Special Range 9, New Delhi (‘learned AO’) under Section 143(3) read with Section 144C of the Income Tax Act (‘Act’) and the
order passed by Hon’ble Dispute Resolution Panel - II (‘Hon’ble DRP’) under Section 144C of the Act, is bad in law and void ab
initio having been passed in the name of an entity United Health Group Information Services Pvt. Ltd. that was no longer in
existence at the time of passing of such impugned orders.

2. That, without prejudice, the learned AO has grossly erred in making a transfer pricing addition of INR 5,43,68,348/- and a
corporate tax addition of INR 55,73,134/- while computing the income of the Appellant. The addition made to the returned
income is highly unjustified.

Part I - Transfer Pricing (“TP”) Grounds

3. That on the facts of the case and in law, the Deputy Commissioner of Income Tax, Transfer Pricing Officer- 3(3)(1), New Delhi (‘learned TPO’)/ AO has erred in making TP adjustment of INR 5,43,68,348/- instead of INR 94,36,839 as computed vide rectification order passed by the learned TPO under section 92CA(5) read with section 154 of the Act.

4. That on the facts of the case and in law, the learned TPO/ Hon’ble DRP has erred in making TP adjustment on account of
notional interest on receivables from AE without application of any method as prescribed under section 92C of the Act.

5. That on the facts of the case and in law, the learned TPO/ Hon’ble DRP has erred in re-characterizing the inter-company
receivables as a separate international transaction of an unsecured loan and imputing interest on such transaction.

6. That on the facts of the case and in law, the learned TPO/ Hon’ble DRP has erred in making a TP adjustment for intercompany receivables realization without appreciating the fact that Appellant follows a uniform policy of not charging any interest for delayed realizations from AE as well as Non- AEs.

7. That on the facts of the case and in law, the learned TPO/ Hon’ble DRP has erred in making a TP adjustment for intercompany receivables realization despite the fact that the  Appellant is a debt free company and no separate interest cost is paid by the Appellant to its creditors or suppliers on delayed payments (if any).

8. That on the facts of the case and in law, the learned TPO/ Hon’ble DRP has erred in making a TP adjustment for intercompany receivables realization without appreciating the fact that the inter-company receivable days of 51 days and 48 days in relation to provision of IT and IT enabled services to AE respectively for FY 2012-13 was less than the receivable days of comparable companies selected by the Appellant as well as learned TPO for determining the arm’s length price of provision of IT and IT-enabled services to AE.

9. That on the facts of the case and in law, the learned TPO/ Hon’ble DRP has erred in not appreciating that inter-company receivables arising out of the provision of services by the Appellant to its AE is closely linked to such transaction and if such services
transaction is determined at an arm’s length price after considering working capital adjusted margins of comparable companies, no separate adjustment can be made for such intercompany receivables. 

To read more in details, find the enclosed file