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TMI Blog2017 (3) TMI 478X X X X Extracts X X X X X X X X Extracts X X X X ..... aluru. 2. Briefly stated, assessee is engaged in the business of providing medical transcription services and allied software development and support services to its Associated Enterprise [AE]. The taxpayer is being remunerated on cost + 11% basis. It has international transactions reported as under: AE Nature of transaction Amount (Rs.) iMedX Inc Provision of ITES in the area of medical transcription 13,20,80,068 iMedX Inc Development & maintenance of medical transcription software tools 2,63,56,949 Total: 15,84,37,017 3. Assessee in its TP study, adopted CUP method and relied on seventeen Indian companies which have provided medical transcription services. The average rate charged by them has been arrived at 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Ltd., dt. 19-10-2012 has accepted the CIT(A)'s order that CUP method is only the appropriate method and dismissed the Revenue's appeal, which in turn was upheld by the Hon'ble High Court of Andhra Pradesh and Telangana in ITTA No. 731 of 2014 dt.31-12-2014. Assessee has submitted comparability with that of M/s. Ckar Systems (P) Ltd., ('Ckar India') as under: Facts Appellant Ckar India Nature of business Medical transcription services Medical transcription services Currency United States Dollar (USD) USD Recipient entity Holding Company-iMedX Inc., USA Ultimate Holding Company-CBay USA Impugned transaction Application of CUP method for medical transcription services Application of CUP method for medical transcription ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... blic domain with respect to independent enterprises. (Source: para 4, ITA No. 565/Hyd/2011) * Comparables are assured of the revenues based on the number of lines transcribed but in case of taxpayer, revenue is based on cost incurred. CIT(A) findings- Similar services was availed by the holding company from third party entities in India on identical terms and conditions. Hence internal CUP is available * The basis of estimation of cost of the taxpayer is unknown and hence the rate per line derived by the taxpayer is subject to assumptions. - CUP method was correctly applied by the Assessee to benchmark its international transactions as per OECD guidelines. - CIT(A) deleted the TP adjustment since the rates paid by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he fact that CUP method is the most direct and reliable method to apply for determining the ALP in the current case. * When information and data are available, the Ld.TPO should not have rejected the CUP method. High Court's Adjudication * The Hon'ble High Court of Andhra Pradesh and Telangana has dismissed the Revenue's appeal and upheld CKar India's ITAT order when it was held that assessee followed one permissible method of computing the arm's length price and the same was held to be valid by the Tribunal and we see no reason to interfere with the order in so far as this aspect is concerned. (Source: I.T.T.A. No. 731 of 2014) 4.1. In view of that, it was submitted that the TPO may be directed to adopt CUP method for its ..... X X X X Extracts X X X X X X X X Extracts X X X X
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