Transcend MT Services Pvt. Ltd., Bangalore Vs. DCIT, New Delhi

This appeal concerns Transcend MT Services Pvt. Ltd. and its dispute with the Deputy Commissioner of Income Tax regarding the assessment year 2010-11. The core issue revolves around the arm's-length price of international transactions, specifically the provision of back-office medical transcription services. The Assessing Officer, following directions from the Dispute Resolution Panel and the Transfer Pricing Officer, increased the assessee's total income significantly due to adjustments made to the pricing of these services.

INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH “I-2”: NEW DELHI
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER
AND
SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER

ITA No. 2229/Del/2015
(Assessment Year: 2010-11)

Transcend MT Services Pvt. Ltd,(formerly known as Heartland Information and Consultancy Services Pvt. Ltd),Plot No. 1/1, Arakere,Bannerghata Road,Bangalore PAN: AABCH2275E
(Appellant) 

Vs. The Deputy Commissioner of

Income Tax,Circle-25(2),New Delhi
(Respondent)

Assessee by : Shri Vishal Kalra, Adv
Shri Ankit Saini, Adv
Shri S Tomar, Adv
Revenue by: Ms Nidhi Sharma Sr Dr

Date of Hearing 21/08/2020
Date of pronouncement 18/11/2020

O R D E R

PER PRASHANT MAHARISHI, A. M.

1. This appeal is filed by TRANSCEND MT SERVICES PRIVATE LIMITED (formerly known as Heartland Information And Consultancy Services Private Limited) (referred to as the Assessee/Appellant) against the order of THE DEPUTY COMMISSIONER OF INCOME TAX, Circle 25 (2), New Delhi (The AO) passed u/s 143 (3) read with Section 144C (13) of The Income Tax Act,1961 (The Act) for assessment year 2010 – 11, wherein pursuant to the direction of the learned Dispute Resolution Panel [ The ld DRP] the total income of the assessee was assessed at Rs 55,806,130/– against the returned income of Rs. 23,564,600/– , wherein the only adjustment is made with respect to the arm’s-length price of the International Transactions pursuant to the order of THE LEARNED ADDITIONAL COMMISSIONER OF INCOME TAX, TRANSFER PRICING OFFICER – I (2), New Delhi [ The Ld TPO] passed u/s 92CA (3) of The Act on 9/1/2014, which was subject to the direction of the Learned Dispute Resolution Panel dated 2/12/2014 wherein the arm’s-length price of the transaction of the assessee of Rs 360,154,748/– was determined at Rs 378,162,485/– and thereafter an adjustment was made of ₹ 32,241,526/-.

2. The assessee has raised the following grounds of appeal:-

“1. That on the facts and circumstances of the case and in law, the AO has erred in completing the assessment of the Appellant under section 143(3) read with section 144C(13) of the Act, at an income of Rs. 5,58,06,130 in pursuance to the directions issued by the DRP, as against returned income of Rs. 2,35,64,600.

2. That on the facts and circumstances of the case and in law, reference made by the AO to the TPO is void ab-initio and bad in law as the AO failed to provide copy of approval granted by the Commissioner of Income tax and affording any opportunity of being heard to the Appellant, in violation of the principle of natural justice.

3. That on the facts and circumstances of the case and in law, the AO/ Transfer Pricing Officer (“TPO”) / DRP have erred in making an upward TP adjustment of Rs. 3,22,41,526 in respect of the transaction pertaining to provision of back office medical transcription services to its associated enterprises (“AEs"), alleging that the same were not at arm’s length.

4. That on the facts and circumstances of the case and in law, the AO / DRP / TPO erred in not accepting the economic analysis undertaken by the Appellant in accordance with the provisions of the Act read with the Income-tax Rules, 1962 (“Rules”) for determination of thearm’s length price (“ALP”) of provision of back office medical transcription services to AEs.

4.1 That on the facts and circumstances of the case and in law, the AO / DRP / TPO erred inignoring the provisions of Rule 10B(4) of the Rules which allows use of multiple year data of comparable companies for the purpose of determination of the ALP.

4.2 That on the facts and circumstances of the case and in law, the AO / DRP / TPO erred in arbitrarily rejecting / modifying the search process and filters adopted by the Appellant for the benchmarking its international transactions of provision of back office medical transcription services to AEs.

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