FRESHWORKS TECHNOLOGIES PRIVATE LIMITED,CHENNAI V. DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE1(1), CHENNAI

SA 70/CHNY/2026

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The case revolves around a transfer pricing adjustment made by the Deputy Commissioner of Income Tax, Chennai, concerning Freshworks Technologies Pvt. Ltd. The adjustment pertained to notional interest on delayed realization of receivables from its Associate Enterprise, amounting to Rs.3,76,02,920. The Tax Officer (TPO) and the Dispute Resolution Panel (DRP) had both upheld this adjustment, leading to the final assessment order. Freshworks contested this in the Tribunal, arguing that the receivables were linked to the main transaction and that the company was debt-free, thus not incurring any interest costs. The Tribunal, referencing several judicial precedents and the company's financial status, ruled in favor of Freshworks, deleting the adjustment.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 839655 (ITAT-CHENNAI)
• Duration Of Justice: 7 day(s)
• Appeal Type: Stay Application
• Pronouncement Date: 25-02-2026
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2022-2023
• Appeal Filed On: 18-02-2026
• Other Referred Cases: Bechtel India Pvt. Ltd. vs. DCIT, Expleo Solutions Ltd. vs. DCIT, PCIT vs. Kusum Healthcare Pvt. Ltd, Sanmina-SCI India Pvt. Ltd. vs. DCIT, Temenos India Pvt. Ltd. vs. DCIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M. K. BIJU
• Assessee Lawyers: VIKRAM VIJAYARAGHAVAN
• Keywords: Set aside; Transfer pricing; International transaction; Retrospective amendment; Question of law; Notional interest; Wholly owned subsidiary; Application of stay; Working capital adjustments
• Section: 143(3); 92B

Judgement Text

"आयकर अपीलȣय अͬधकरण, ‘डी’ Ûयायपीठ, चेÛनई IN THE INCOME TAX APPELLATE TRIBUNAL ‘D’ BENCH, CHENNAI Įी जॉज[ जॉज[ क े, उपाÚय¢ एवं Įी एस.आर.रघुनाथा, लेखा सदèय क े सम¢ BEFORE SHRI GEORGE GEORGE K, VICE PRESIDENT AND SHRI S.R. RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./IT(TP)A No.: 27/CHNY/2026 िनधाᭅरण वषᭅ/Assessment Year: 2022-23 & S.A. No. 70/CHNY/2026 [In IT(TP)A No. 27/CHNY/2026] Freshworks Technologies Pvt. Ltd., No.40, Block B Module 1 & 2, 1st Floor, Global Infocity, MGR Salai, Perungudi, Kanchipuram – 600 096. PAN: AABCF 6966C Vs. The Deputy Commissioner of Income Tax, Corporate Circle 1(1), Chennai. (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) अपीलाथᱮ कᳱ ओर से/Appellant by : Shri Vikram Vijayaraghavan, Advocate ᮧ᭜यथᱮ कᳱ ओर से/Respondent by : Shri M.K. Biju, CIT सुनवाई कᳱ तारीख/Date of Hearing : 24.02.2026 घोषणा कᳱ तारीख/Date of Pronouncement : 25.02.2026 आदेश/ O R D E R PER GEORGE GEORGE K, VICE PRESIDENT: This appeal filed by the assessee is directed against the final assessment order dated 23.12.2025 passed under section 143(3) r.w.s.144C(13) r.w.s. 144B of the Income Tax Act, 1961 Printed from counselvise.com IT(TP)A No.27/Chny/2026 & SA No.70/Chny/2026 :- 2 -: (hereinafter called ‘the Act’). The relevant Assessment Year is 2022-23. 2. The solitary issue that is raised is whether the TPO/DRP is erred in making adjustment of Rs.3,76,02,920/- in respect of notional interest on delayed realization of outstanding receivables from the assessee’s Associate Enterprise (AE). 3. Brief facts of the case are as follows: The assessee is a company incorporated in the year 2010. It is a wholly owned subsidiary of Freshworks Inc, USA [Freshworks, USA]. The assessee is a capital service provider engaged in the business of providing software design development and support services to its AE namely Freshworks, USA. For the assessment year 2022- 23, the return of income was filed on 23.11.2022 declaring total income of Rs.280,23,13,076/-. The return was selected for scrutiny and notice u/s.143(2) of the Act was issued on 01.06.2023. Thereafter, notice u/s.142(1) of the Act was issued on various dates. During the course of assessment proceedings, it was noticed that assessee had undertaken international transactions with its AE. To determine the Arms’ Length Price of the International transaction, the case was referred to the TPO. Printed from counselvise.com IT(TP)A No.27/Chny/2026 & SA No.70/Chny/2026 :- 3 -: The assessee in its TP study had adopted TNMM method as the most appropriate method and factored the impact of difference in credit period. According to the assessee, aggregation of the trade receivable with the software development services was on account of closely linked transaction which the assessee company had with its AE (namely software development services). The TPO disregarded the TP study of the assessee. The TPO vide his order dated 27.01.2025 passed u/s.92CA of the Act, held that the outstanding receivable constitutes a separate international transaction which has an impact on P&L account of the assessee company in the form of opportunity cost of funds and indirectly convey benefit to the AE’s in the form of interest free advance. Therefore, the TPO imputed notional interest on outstanding receivables collected beyond 30 days at the rate of LIBOR + 350 points (BPS). Accordingly, the TP adjustment proposed was Rs.3,76,02,920/- in the order passed u/s.92CA of the Act on 27.01.2025. 4. Pursuant to the TPO’s order, the AO passed the draft assessment order on 18.03.2025 u/s.144C(1) of the Act by incorporating the TP adjustment proposed by the TPO. Against the draft assessment order, assessee filed objections before the Printed from counselvise.com IT(TP)A No.27/Chny/2026 & SA No.70/Chny/2026 :- 4 -: DRP on 06.05.2025. The DRP disposed off the objections of the assessee vide its directions dated 12.12.2025. The DRP rejected the objections of the assessee company and confirmed the TP adjustment proposed by the TPO. 5. Pursuant to the DRP’s direction, the impugned final assessment order was passed on 23.12.2025 by incorporating the TP adjustment confirmed by the DRP’s direction. Aggrieved by the final assessment order dated 23.12.2025, assessee has filed the present appeal before the Tribunal. The grounds raised read as follows:- Transfer Pricing grounds A.1 Interest on outstanding receivables 1 The learned AO/TPO/DRP has erred in law and on facts and in the circumstances of the case in making an adjustment of INR 3,76,02,920 in respect of notional interest on delay in realization of outstanding receivable. Considering outstanding receivables as a separate international transaction: 2 The learned AO/TPO/DRP have erred in law and on facts in not appreciating that the outstanding receivables are inextricably linked to the main international transaction and are not a separate transaction. Interest on outstanding receivables is subsumed in working capital adjustment made to primary transaction: 3 The learned AO/TPO/DRP has erred in law and on facts in not appreciating that the working capital adjustments made by the Appellant while benchmarking the primary transactions duly factors the interest cost on outstanding receivables from AEs. Printed from counselvise.com IT(TP)A No.27/Chny/2026 & SA No.70/Chny/2026 :- 5 -: Debt free entity and has no interest cost: 4 The learned AO/TPO/DRP has erred in law and on facts in not appreciating that the Appellant is a debt free entity and does not have any working capital contingencies and the Appellant has Chennai not incurred any costs in relation to working capital requirements. Disregard of the Agreed 60-Day Credit Period 5 The learned AO/TPO/DRP has erred in law and on facts in not appreciating that, as per the inter-company agreement, a 60-day credit period had been mutually agreed between the appellant and its Associated Enterprise, and therefore the non-consideration of such agreed credit period is unjustified No interest recovered by AEs: 6 The learned AO/TPO/DRP has erred in law and on facts in not appreciating that the AEs of the Appellant have not charged any interest on overdue trade payables by the Appellant. Netting of outstanding receivables against payables from AEs 7 Without prejudice to above, the learned AO/TPO/DRP ought to have computed interest on outstanding receivables only after netting off interest on outstanding payables to AEs/ advances from AEs All the above grounds may be considered independent and without prejudice of each other 6. The Ld.AR referring to Ground No.4, submitted that assessee company is a debt free entity and has no interest cost. Therefore, it was submitted that imputing notional interest on outstanding receivables is unwarranted and relied on the following judicial pronouncements:-  Bechtel India Pvt. Ltd., vs. DCIT in ITA No.1478/Del/2015, HC – ITA 379/2016 and SC 4956/2016 Printed from counselvise.com IT(TP)A No.27/Chny/2026 & SA No.70/Chny/2026 :- 6 -:  Expleo Solutions Ltd., vs. DCIT in IT(TP)A No.136/Chny/2024  PCIT vs. Kusum Healthcare Pvt. Ltd of Hon’ble Delhi High Court in ITA No.765/2016  Sanmina-SCI India Pvt. Ltd., vs. DCIT in IT(TP)A No.23/Chny/2018  Temenos India Pvt. Ltd., vs. DCIT in IT(TP)A No.32/Chny/2024 7. The Ld.AR submitted that if Ground No.4 is decided in favour of the assessee, which is squarely covered by the above judicial pronouncements, other grounds may be left open and need not be adjudicated. 8. The Ld.DR submitted that the issue whether assessee is a debt free entity or not has not been adjudicated by the DRP. Hence, the matter may be remanded to the TPO / DRP. 9. We have heard rival submissions and perused the material on record. The assessee company before the DRP had raised specific objection namely, it is a debt free company and no notional interest needs to be computed on the outstanding receivables. The objection raised before DRP in Ground No.2(2) reads as follows:- “Ground of Objection No.2. ………. 2. Failing to appreciate that the assessee is debt free and thus no interest for outstanding receivables is warranted.” Printed from counselvise.com IT(TP)A No.27/Chny/2026 & SA No.70/Chny/2026 :- 7 -: 10. From the directions of the DRP, we find that this objection of the assessee has not been disposed off. However, from facts on record, it is clear by perusing the balance sheet of the assessee company at page 118 of the appeal set, note to balance sheet which runs from page 134 to 135 of the appeal set and the financial cost (notes to the accounts) at page 135 of the appeal set, that assessee is a zero debt/debt free company. The assessee company does not have any borrowings from either internal or external sources. Hence, the assessee has not faced any additional burden for managing its working capital cycle on account of overdue receivables. Therefore, imputing notional interest cost on outstanding receivable with its AE is not warranted. In support of our conclusion, we rely on the latest order of the Chennai Bench of the Tribunal in the case of Temenos India Pvt Ltd., vs. DCIT in IT(TP)A No.32/CHNY/2024 (order dated 03.12.2024). The order of the Chennai Bench of the Tribunal has relied on various judicial pronouncements and decided the case in favour of the assessee by deleting the notional interest on outstanding receivables when the assessee in said case was a debt free company. The relevant finding of the Printed from counselvise.com IT(TP)A No.27/Chny/2026 & SA No.70/Chny/2026 :- 8 -: order of the Chennai Bench of the Tribunal in the case of Temenos India Pvt. Ltd., (supra) reads as follows:- 11. We have heard rival submissions and perused the material on record. The Hon’ble Delhi High Court in the case of Kusum Healthcare Pvt.Ltd., (supra) had categorically held that inclusion in the Explanation to Section 92B of the Act by the Finance Act, 2012 in regard to expression ‘receivables’ does not mean that de hors the context every item of ‘receivables’ appearing in the accounts of an entity, which may have dealings with foreign AEs would automatically be characterized as an international transaction. The Hon’ble High Court held that there may be delay in collection of monies for supplies made, even beyond the agreed period, due to a variety of factors which will have to be investigated on case to case basis and the impact of this would have on the working capital of the assessee will have to be studied and enquired properly by the AO for analyzing the statistics over a period of time to find out the pattern which would indicate that viz-a-viz the receivables for the supplies made to its AE, the arrangement reflects an international transaction intended to benefit the AE in some way. Further, the Hon’ble High Court held that when the assessee having already factored in the impact of receivables on the working capital and thereby on its profitability viz-a-vis with that of its comparables, any further adjustment, only on the basis of outstanding receivables would have distorted the picture. Hence, it was held that it is not permissible. In this instant case before us also, the TPO has not carried out basic exercise or any analysis on the facts of the case or the factors mentioned by the Hon’ble Delhi High Court. The TPO has not carried out any exercise of statistics and the pattern which would indicate that the receivables from supplies will benefit the AEs in some way. 12. Most importantly, we find that the assessee is a debt free company. In other words, outstanding receivables will not impact the profitability of the company because the assessee is having largely its own funds and there is no debt secured by assessee on which interest is to be paid by the assessee. Hence, the delayed receivables will not impact in any way. The Co-ordinate Bench of Chennai, ITAT in the case of Integra Software Services Pvt. Ltd., in ITA No.736/CHNY/2017 (order dated 21.10.2022) has considered the issue of zero debt entity and finally deleted the addition by observing in para 3.4 as under:- Printed from counselvise.com IT(TP)A No.27/Chny/2026 & SA No.70/Chny/2026 :- 9 -: 3.4 From the fact, it emerges that the assessee has not charged any interest on outstanding receivables from AEs and non-AEs. Further, the loans advanced to AEs have been benchmarked separately. It also emerges that the assessee is a zero-debt entity and do not incur significant interest expenditure. Therefore, to allege that the assessee accommodated its AEs in the guise of receivables would not be a correct proposition. Therefore, this addition is not sustainable. We order so. The corresponding grounds raised by the assessee stand allowed. 13. Before concluding it is to be mentioned that DRP had relied on the Delhi Bench of the ITAT order in the case of Bechtel India Pvt. Ltd., in ITA No.6530/Del/2016, dated 16.05.2017, (Assessment Year 2012-13). This order of the Delhi Bench of the Tribunal in the case of Bechtel India Pvt. Ltd., for AY 2012-13, had distinguished the Delhi Bench order in the same assessee’s case concerning assessment year 2010-11. The Delhi Bench order in the case of Bechtel India Pvt. Ltd., for assessment year 2010-11 in ITA No.1478/Del/2015 (order dated 21.12.2015) had deleted the interest on delayed receivables citing that assessee was a debt free company and no interest was paid even on delayed payables. The above order of the Tribunal for assessment year 2010-11 concerning Bechtel India Pvt. Ltd., was confirmed by the Hon’ble Delhi High Court in ITA No.379/2016 (judgment dated 21.07.2016). The Delhi High Court judgment was confirmed by the Hon’ble Supreme Court in CC No. 4956/2017 (judgment dated 21.07.2017). The Supreme Court dismissed the Revenue’s SLP and upheld the Hon’ble Delhi High Court judgment. The Tribunal in the case of Bechtel India Pvt. Ltd., concerning assessment year 2012-13 (relied on by the DRP) had not taken note of the Delhi High Court concerning AY 2010-11. The Hon’ble Supreme Court judgment concerning AY 2010-11 was rendered on 21.07.2017 i.e., after order of ITAT for AY 2012-13. 14. For the subsequent assessment year namely AY 2013-14, (post the judgment of the Hon’ble Supreme Court judgment and the Hon’ble Delhi High Court judgment in the case of Bechtel India Pvt. Ltd., concerning AY 2010-11) the Delhi Bench of ITAT in ITA No.7234/Del/2017 (order dated 18.12.2020) had discussed the conflicted saga of Bechtel cases concerning Assessment Year 2010-11 and 2012-13 and held that the Hon’ble Supreme Court judgment in Bechtel India Pvt. Ltd., for the assessment year 2010-11 (supra) had settled the law and Printed from counselvise.com IT(TP)A No.27/Chny/2026 & SA No.70/Chny/2026 :- 10 -: there cannot be any interest imputed on outstanding receivables when assessee in the said case was a debt free company. The relevant facts, contentions raised by both the sides and the finding of the Delhi Bench of the Tribunal in the case of Bechtel India Pvt. Ltd., for assessment year 2013-14 (supra), reads as follows:- 11. The ground No. 5 of the appeal relates to transfer pricing adjustment for interest on receivables. 11.1 The facts qua the issue in dispute are that in view of payments against invoices raised by the assessee to associated enterprises were received with the delay more than industry standard. The Learned TPO proposed a separate transfer pricing adjustment re- characterizing the outstanding receivables as unsecured loans. He applied CUP method for benchmarking the transaction of interest on receivables and using SBI prime lending rate, computed adjustment for interest on receivables amounting to ₹ 1,30,78,181/-. On the objections of the assessee, the Learned DRP noted that in assessment year 2010-11, the Tribunal following the decision of the Tribunal in the case of Kusum Healthcare Private Limited (reported in TS-129- ITAT 2015(Del)-TP) held that no separate adjustment for interest on receivable was warranted when working capital adjustment was already granted to the assessee. The Learned DRP further noted that Hon’ble Delhi High Court in the assessee own case (ITA No.379/2016) for assessment year 2010-11 vide order dated 21/07/2016 upheld the order of the Tribunal holding that the assessee is a debt free company and the question of receiving any interest on receivable did not arise. The Learned DRP thereafter noted that the Tribunal in assessment year 2012-13 in order dated 16/05/2017 relying on the decision of the Tribunal in the case of ‘Ameriprise India P Ltd.’, 2015-TII-347-ITAT-Del-TP held that when the export proceeds are realized within the year, but beyond the stipulated period of the agreement, then same will not come within the working capital adjustment and rejected the contention of the assessee that interest on delayed payment of receivable get subsumed in the working capital adjustment allowed to the assessee. The Tribunal in AY 2012-13 held that interest on delayed realization of receivables is a separate international transaction and therefore require benchmarking. The Tribunal applying interest rate of six months LIBOR +400 basis point on receivables, upheld the transfer pricing adjustment of interest on receivables accordingly. In view of Printed from counselvise.com IT(TP)A No.27/Chny/2026 & SA No.70/Chny/2026 :- 11 -: the finding of the Tribunal in assessment year 2012-13, the Learned DRP in the year under consideration directed the Learned TPO to compute the adjustment using the interest rate of six month of LIBOR +400 basis point. 11.2 Before us, the Learned Counsel of the assessee has repeated the historical background of the issue in dispute and submitted that special leave petition filed by the Revenue against the order of the Hon’ble High Court for assessment year 2010-11 has been rejected by the Hon’ble Supreme Court on 21/07/2017, which is after the order of the Tribunal for AY 2012-13 dated 16/05/2017 and therefore decision of the Tribunal in assessment year 2012-13 need not be followed. 11.3 The Learned DR, on the other hand, submitted that the Tribunal in assessment year 2012-13 noted the decision of the Hon’ble High Court in assessment year 2010-11 and after taking into consideration the Explanation inserted by way of the Finance Act, 2012 to section 92B with retrospective effect from 01/04/2002, held that any delay in realization of debt arising during the course of the business is liable to be visited with TP adjustment on account of interest income short charged or uncharged. In view of the learned DR, the Learned DRP is justified in following the order of the Tribunal in assessment year 2012-13. 11.4 We have heard rival submission of the parties on the issue in dispute and relevant material on record including the decisions cited by the Learned Counsel of the assessee as well as by the Learned DR. In the instant case, the Learned DRP has noted the decisions of the Tribunal and High Court in the earlier years. In assessment year 2010-11 the Tribunal in ITA No.1478/Del/2015 placed reliance on the decision of the Tribunal in the case of Kusum Healthcare Private Limited (supra) and held that impact of credit period was duly factored in working capital adjustment allowed while determining the arm’s-length price and, therefore, no separate adjustment for interest on receivables was warranted in the hands of the tested party. The relevant extract of the decision of the Tribunal is reproduced as under: Printed from counselvise.com IT(TP)A No.27/Chny/2026 & SA No.70/Chny/2026 :- 12 -: “15.1 It is brought to our notice that the assessee is a debt free company. In such circumstances it is not justifiable to presume that, borrowed funds have been utilized to pass on the facility to its AE’s. The revenue has also not brought on record that the assessee has been found paying interest to its creditors or suppliers on delayed payments. 16. In lieu of the discussions and the ratio laid down in the case of Kusum Healthcare Pvt. Ltd., we direct that no separate adjustment for interest on receivables are warranted in the hands of the assessee. Grounds no. 3 of the assessee’s appeal is there by allowed.” 11.5 On appeal by the Revenue, against the above order of the Tribunal, the Hon’ble Delhi High Court (ITA No. 379/2016) in order dated 21/07/2016 dismissed the appeal observing as under: “4. As far as question (B) concerning the adjustment for interest no receivables, the Court finds that the ITAT has returned a detailed finding of fact that the Assessee is a debt free company and the question of receiving any interest on receivables did not arise. Consequently, no substantial question of law arises for consideration as far as this issue is concerned.” 11.6 The assessee brought the decision of the Hon’ble High Court in assessment year 2010-11, before the Tribunal in assessment year 2012-13 by way of raising ground No. 1.5 of the appeal, however, the Tribunal after considering the amendment brought into Act by way of Finance Act, 2012 and other decisions held that interest on delayed realization of receivable is a separate international transaction, which requires separate benchmarking. The finding of the Tribunal in assessment year 2012-13 is reproduced as under: “17. We have considered the submissions of both the parties and perused the record of the case. The assessee's grievance is two- fold. Firstly, when working capital adjustment has been made, then, no separate adjustment is required to be made in respect of accounts receivables because the same gets subsumed in the working capital Printed from counselvise.com IT(TP)A No.27/Chny/2026 & SA No.70/Chny/2026 :- 13 -: adjustment. The second plea of the assessee is that since its funds are entirely debt free, therefore, no adjustment is warranted in regard to late realisation of proceedings from receivables. The assessee's reliance as noted earlier, is on the decisions in its own cases for assessment year 2010-11 and 2011-12. The issue has been elaborately considered in the case of Ameriprise India Pvt. Ltd. (supra) and, again, in the case of Mckinsey Knowledge Centre Pvt. Ltd. (supra). In the case of Techbooks India International Pvt. Ltd. vs. DCIT (supra), taking note of the Explanation inserted by the Finance Act, 2012 to Section 92B, it was observed that there remained no doubt that apart from any short-term or long-term borrowing, etc., or even advance payments or deferred payments, 'any other debt arising during the course of business' had also been expressly recognized as an international transaction. In the said decision, the decision of the Hon'ble Bombay High Court in the case of CIT vs. Patni Computer Systems was also considered, wherein Hon'ble Bombay High Court set aside the view taken by the Tribunal in view of amendment to section 92B. The decision in the case of Kusum Healthcare Pvt. Ltd. was duly considered in the case of Ameriprise India Pvt. Ltd. and it was observed from para 20 to 23 as under:- The ld. AR supported the impugned order by relying on a Tribunal order dated 31.3.2015 passed in Kusum Healthcare Pvt. Ltd. vs. ACIT (ITA No.6814/Del/2014) in which it has been held that no additional imputation of interest on the outstanding receivables is warranted if the pricing/profitability is more than the working capital adjusted margin of the comparables. In the opposition, the ld.DR relied on a later order dated 6.7.2015 passed by the Tribunal in the case of Techbooks International Pvt. Ltd. (supra), in which the transfer pricing adjustment on account of the delayed realization of invoices from AEs has been upheld. The ld. DR contended that the order in the case of Kusum Healthcare Pvt. Ltd. (supra), has been passed without considering the amendment to section 92B carried out by the Finance Act, 2012 with retrospective effect from 1.4.2002, which has been duly taken into account by the Tribunal in its later order in Techbooks International Pvt. Ltd. (supra). Printed from counselvise.com IT(TP)A No.27/Chny/2026 & SA No.70/Chny/2026 :- 14 -: 21. After considering the rival submissions and perusing the relevant material on record, it is noticed as highlighted above, that the assessee argued before the TPO that interest on receivables is not an international transaction. At this stage, it would be apposite to note that the Finance Act, 2012 has inserted Explanation to section 92B with retrospective effect from 1.4.2002. Clause (i) of this Explanation, which is otherwise also for removal of doubts, gives meaning to the expression 'international transaction' in an inclusive manner. Sub-clause (c) of clause (i) of this Explanation, which is relevant for our purpose, provides as under:- Explanation.--For the removal of doubts, it is hereby clarified that-- (i) the expression \"international transaction\" shall include-- (a) ............ (b) ........... (c) capital financing, including any type of long-term or short- term borrowing, lending or guarantee, purchase or sale of marketable securities or any type of advance, payments or deferred payment or receivable or any other debt arising during the course of business;” 11.7 But before us the Learned Counsel of the assessee has referred to the decision of the Hon’ble Supreme Court dated 21/07/2017, which is after the decision of the Tribunal in assessment year 2012- 13. The Hon’ble Supreme Court has held as under: “Delay condoned. We are in agreement with the High Court that as far as Question-B concerning adjustment for interest on receivables is concerned the Tribunal has returned a finding of fact. Consequently, no substantial question of law therefore, rises, on the facts of this case. The special leave petition is dismissed.” 11.8 In view of the order of the Hon’ble Supreme Court, which is subsequent to the order of the Tribunal in assessment year 2012-13, Printed from counselvise.com IT(TP)A No.27/Chny/2026 & SA No.70/Chny/2026 :- 15 -: we direct the Ld. AO/TPO to delete the transfer pricing adjustment on account of the interest receivables. The ground No. 5 of the appeal of the assessee is accordingly allowed. 15. From the above order of the Delhi Bench of the Tribunal in the case of Bechtel India Pvt. Ltd., concerning AY 2013-14, we find that ITAT has taken note of the judgments of the Hon’ble Delhi High Court, Hon’ble Supreme Court concerning AY 2010-11 and also co-ordinate bench order of the Tribunal for assessment year 2012-13. After taking note of above judicial pronouncements, the ITAT had deviated from its earlier order for AY 2012-13 and followed the judgment of Hon’ble Delhi High Court and Hon’ble Supreme Court concerning AY 2010-11. The Delhi Bench of the Tribunal in Bechtel India Pvt. Ltd., for the assessment year 2013-14 had categorically held that there need not be any transfer pricing adjustment for imputing interest cost for the outstanding trade receivables from AEs when the assessee in the said case is a debt free company. Therefore, the DRP’s reliance on the order of Delhi Bench of the Tribunal in Bechtel India Pvt. Ltd., concerning assessment year 2012-13 (which according to us has not laid down a correct proposition of law) is legally not tenable. In light of the above, we delete the transfer pricing adjustment imputing interest income on the outstanding trade receivables. In the result, the Ground No.2 (f) is allowed. Since we have deleted the TP adjustment of Rs.3,14,15,287/-, Ground No. 2 and its other sub-grounds are not adjudicated. It is ordered accordingly. 11. In the instant case, it is clear from material on record that assessee company is a zero debt/debt free company and does not have any borrowings from internal or external sources. Therefore, the assessee company has not faced any additional burden for managing its working capital cycle on account of overdue receivables from its AE. Therefore, relying on the judicial pronouncement cited supra, we delete the TP adjustment of Rs.3,76,02,920/-. Therefore Ground No.4 (supra) is decided in Printed from counselvise.com IT(TP)A No.27/Chny/2026 & SA No.70/Chny/2026 :- 16 -: favour of the assessee company. The other grounds are not adjudicated and is left open. It is ordered accordingly. SA No.70/CHNY/2026 12. Since we have disposed off the appeal, the Stay application is rendered infructuous and is dismissed. 13. In the result, the appeal filed by the assessee is partly-allowed and the stay application filed by the assessee is dismissed. Order pronounced in the open court on 25th February, 2026 at Chennai. Sd/- Sd/- (एस.आर. रघुनाथा) (S.R. RAGHUNATHA) लेखा सदèय/ACCOUNTANT MEMBER (जॉज[ जॉज[ क े) (GEORGE GEORGE K) उपाÚय¢ /VICE PRESIDENT चे᳖ई/Chennai, ᳰदनांक/Dated, the 25th February, 2026 RSR आदेश कȧ ĤǓतͧलͪप अĒेͪषत/Copy to: 1. अपीलाथȸ/Appellant 2. Ĥ×यथȸ/Respondent 3. आयकर आयुÈत /CIT, Chennai 4. ͪवभागीय ĤǓतǓनͬध/DR 5. गाड[ फाईल/GF. Printed from counselvise.com "