Transcend MT Services Pvt. Ltd Vs. DCIT
Assessee is a company wherein 99.99% of the shareholding is held by a Mauritius parent and 0.01% by a US company. It is engaged in providing medical transcription services to its associated enterprise. The case of the assessee was picked up for scrutiny and the international transactions were referred to the learned Transfer Pricing Officer for determining arm’s-length price. The assessee benchmarked its transaction using Transactional Net Margin Method [TNMM] as the Most Appropriate Method using Operating Profit/Total Cost[OP/TC]as the Profit Level Indicator [PLI] selecting six comparable companies.
Delhi ITAT did not find that this company is functionally dissimilar to the functions performed by the assessee. The reference is made with respect to the functions performed by the comparable as per Management Discussion and Analysis, which is related to the consolidated financial statement, nothing was shown to the Bench that it is reflected in the Financial on standalone basis of comparable company. The learned TPO has compared the standalone financial statements of the comparable companies. There is no infirmity that this comparable on standalone basis as per the notes to accounts as per schedule and the profit and loss statement is functionally comparable to the assessee. In the result, appeal of the assessee is partly allowed.