M/S. STANADYNE INDIA PVT. LTD.,TIRUVALLUR V. ITO, CORPORATE WARD-6(2), CHENNAI

ITTPA 100/CHNY/2024

AI Insights

The case revolves around an appeal by M/s. Stanadyne India Private Limited against the order of the Income Tax Officer, which was upheld by the CIT(A), imposing an addition of Rs.2,59,85,448/- as deemed interest on outstanding trade receivables from its overseas AEs. The primary legal contention was whether these receivables constituted an international transaction under the amended Section 92B of the Income Tax Act, 1961, and whether the Transfer Pricing Officer (TPO) was justified in adjusting the income by treating these receivables as interest-bearing. The Tribunal examined various precedents and the specific amendments to the law, ultimately deciding in favor of the assessee by rejecting the imposition of interest on the grounds that the assessee did not charge or receive interest on such receivables and was a debt-free entity.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 315518 (ITAT-CHENNAI)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 14-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2021-2022
• Other Referred Cases: Kusum Health Care Private Limited, Bechtel India Pvt. Ltd., Tech Books International Pvt Ltd, Outsource Partners International Pvt Ltd, Integra Software Services P Ltd, Temenos India Pvt. Ltd, Foxteq Services India, CMA CGM Shared Service Centre (India) Pvt. Ltd, Verizon Data Services Pvt Ltd, Plintron Global Technologies Solutions, Tecnimont Pvt Ltd
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A. SASIKUMAR
• Assessee Lawyers: S.P.CHIDAMBARAM
• Keywords: Set aside; Transfer pricing; International transaction; Retrospective amendment; Question of law; Commercial expediency
• Section: 143(3); 92B

Judgement Text

"आयकर अपीलीय अधिकरण, ’डी’ न्यायपीठ, चेन्नई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘D’ BENCH: CHENNAI श्री एबी टी. वर्की, न्यायिर्क सदस्य एवं श्री अयिताभ शुक्ला, लेखा सदस्य क े समक्ष BEFORE SHRI ABY T VARKEY, JUDICIAL MEMBER AND SHRI AMITABH SHUKLA, ACCOUNTANT MEMBER आयकर अपील सं./IT(TP)A No.100/Chny/2024 Assessment Years: 2021-22 M/s. Stanadyne India Private Limited, No.96, Aranvoyal Village, Poonamallee, Tiruvallur Tamil Nadu-602 025. [PAN: AAFCS7717L] Income Tax Officer, Corporate Ward-6(2), Chennai. (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/ Assessee by : Shri S.P.Chidambaram, Advocate, प्रत्यर्थी की ओर से /Revenue by : Shri A.Sasikumar, CIT सुनवाई की तारीख/Date of Hearing : 08.04.2025 घोषणा की तारीख /Date of Pronouncement : 14.05.2025 आदेश / O R D E R PER AMITABH SHUKLA, A.M : This appeal is filed against the order u/s 143(3) r.w.s. 144C(13) r.w.s. 144B of Ld. AO, passed w.r.t. recommendations of DCIT-TPO u/s 92CA(3) dated 01.10.2024, vide ITBA/TPO/F/92CA3/2023- 24/1057119989(1) dated 17.10.2023. 2.0 The first issue raised by the assessee through its grounds of appeal is regarding an addition of Rs.2,59,85,448/- made by the Ld. Assessing Officer(hereinafter referred as Ld.AO) on the recommendations of Ld. Transfer Pricing Officer(hereinafter referred as IT(TP)A No.100/Chny/2024 Page - 2 - of 13 TPO) / Dispute Resolution Panel (hereinafter referred as DRP). Briefly put, the assessee was due for receipt of some outstanding trade receivables from its overseas Associate Enterprises (hereinafter referred as AEs) and the Ld.AO treating the same as international transaction exposed them to deemed interest earnings. The Ld.CIT(A) concurred with the findings of the Ld.AO. 3.0 The Ld. Counsel for the assessee assailed the orders of lower authorities. It was argued that the as main trading transaction between the assessees and AEs was accepted to be at arm’s length and no interference was made including the pricing method adopted, there was no occasion to make any further adjustments in the impugned trade receivables. The Ld. Counsel submitted that the impugned transactions did not qualify to be an international transaction requiring any further disturbance. The Ld. AR also stated that the Ld. TPO did not have any authority to interfere with the credit period agreed between the assessees and its AEs. The Ld. Counsel further submitted that it was also not charging any interest from any third parties including the AEs and also that the assessee was not paying any interest to any parties. The Ld. Counsel also reiterated its arguments taken before the Ld.TPO that it had sufficient funds of its own and as it was a debt free company there was no case for exposing outstanding receivables to any interests. The Ld. IT(TP)A No.100/Chny/2024 Page - 3 - of 13 Counsel relied upon the decision of Hon’ble Delhi High court in the case of Kusum Health Care Private Limited. 4.0 The Ld. DR vehemently argued in favour of the order of lower authorities. On the issue of whether interest on over due receivables amounted to an international transactions or not, our attention was invited to amendment made in section 92B vide Finance Act 2012. It was stated that the impugned amendment has significantly broadened the scope of section 92AC wherein by way of its explanation-1 receivables were brought under the definition of international transaction. The present transaction of receiving, receivables beyond due date without any interest thus assumed character of ‘international transaction’ liable for adjustments, if any. It is the case of the Revenue that in the case of Kusum Health Care Private Limited supra, it has been held that due receivables would not automatically assume the character of international transaction unless it has been properly established by the Ld. TPO that the transactions resulted in indirect funding to the AEs. 5.0 We have heard rival submissions in the light of material available on records. As far as the controversy as to whether the impugned transaction of outstanding receivables are ‘international’ transactions or not, we find force in the arguments of the learned DR that they are indeed international transactions. We have noted that an amendment IT(TP)A No.100/Chny/2024 Page - 4 - of 13 u/s.92B has been made in the Act vide Finance Act, 2012 postulating that international transaction shall include “deferred payment or receivable or any other debt arising during the course of business”. It is an undisputed fact of the present case that the issue in question are receivables akin to sundry debts which had arisen to the assessee during the course of its regular business with its AEs. We have also noted that the impugned amendment has been upheld by various courts in their decisions, some of which have been relied upon by the learned DRP. We have also noted that in the case of Kusum Healthcare Private Limited, the Hon’ble Delhi High Court has held that in order to hold receivable as international transactions, the learned TPO would be required to establish through his enquiries that an indirect benefit was intended to be given back the assessee to its AEs by delaying the receipt of receivables. Thus we find sufficient force in the arguments of the revenue that the impugned transactions being receivables from AEs are to be treated as international transactions. 6.0 Coming to another controversy raised by the learned counsel of the assessee regarding primary and secondary adjustments has also been examined. It is the case of the learned counsel of the appellant assessee that the primary transactions being receivables from its AEs was reported in the financials and that the same was accepted at arm’s length by the learned AO. The appellant assesse has argued that post IT(TP)A No.100/Chny/2024 Page - 5 - of 13 this acceptance, there cannot be a case of any further adjustment in the nature of any secondary adjustment. The revenue has argued that the same is not acceptable reference was invited to statutory implications of secondary adjustments contained in section 92CE with effect from 01.04.2018 (for and from AY 2018-19) vide Finance Act, 7 of 2017. It has been argued that the primary adjustment is basically the determination of ALP by the TPO and secondary adjustment is a corresponding adjustment to be made by the assessee to give effect to primary adjustment of the learned TPO. The revenue has argued that the transaction of receivable was said to be at ALP at the end of the financial year when the receivables were not due. However, the receivables became due beyond the due date. Consequently, a need arose to determine ALP for the transaction as assessee’s funds were parked with the AEs without any financial benefit. We are in agreement with the hypothesis propounded by the learned DR from the revenue, though in principle. 7.0 The next and rather the most important controversy to this case raised by the assessee is regarding the charging of interest on the outstanding receivables from AEs. We have noted that the TPO has also recorded on page 5 of his order that the assessee is a debt free company. We have also noted that the assessee was neither charging any interest on outstanding receivables from any party other than its AEs IT(TP)A No.100/Chny/2024 Page - 6 - of 13 nor has received any interest on its sundry debit balances. We have noted that a coordinate Bench of this Tribunal in the case of Trimble Information Technologies India Private Limited vide IT(TP)A No.28/Chny/2024 for Assessment Years: 2020-21 through its order dated 14.02.2025 has held as under:- “….5.0 We have heard rival submissions in the light of material available on records. We have noted that the action of the Ld. AO in making the upward adjustment by disturbing the credit period contracted between the assessee and its foreign AEs is not correct. It is a settled principle of law that the Revenue cannot decide as to how business shall be done by a taxpayer. To this extent the arguments of the Ld. DR that the Ld. TPO has powers to question the commercial expediency are incorrect. The decisions of a business are fundamentally guided with the objective of maximizing the profits and cannot be guided by the taxman. 5.1The Ld. Counsel for the assessee has invited our attention to the decision of Hon’ble Delhi Tribunal in the case of Tech Books International Pvt Ltd vide ITA No.240 of Delhi of 2015 dated 06.07.2015 and of Hon’ble Bangalore Tribunal in the case of Outsource partners International Pvt Ltd vide ITA No. IT(TP)/35/2020 dated 24.06.2022 wherein it has been held that the contracted credit period takes precedence over any other action and that no interest can be charged qua amounts received during the contracted credit. 5.2 We have noted that the Hon’ble Coordinate Bench of this Tribunal vide ITA No. 736/Chny/2017 in the case of M/s. Integra Software Services P Ltd for Assessment Year: 2012-13 has ruled as under:- “….3.1 The assessee had outstanding receivable from its Associated Enterprises (AE). The Ld.TPO held that excessive outstanding receivables have to comply with Transfer Pricing (TP) provisions. The outstanding beyond comparable period was proposed to be treated as separate transaction of interest free advances as per Sec. 92B(1). The maximum credit period was accepted to be 90 days and outstanding receivables beyond that time period were benchmarked at prime lending rate of 14.4%. The same resulted in to an adjustment of Rs.57.14 Lacs. 3.2 Before DRP, the assessee submitted that it did not charge any interest from AE as well as non-AEs. No finance cost was incurred. The delayed realization was beyond the control of the assessee and not to bestow any benefit on the AE. It was also submitted that the assessee - 4 - ITA No.736/Chny/2017 was a zero debt company and it did not have any borrowings from external sources and therefore, it was not required to pay any interest. Further, Ld. TPO having chosen TNMM method erred in making further adjustment for interest on overdue receivable since the application of TNMM would take care of the same. Lastly, the assessee advanced loans to its AEs and charged interest at LIBOR and therefore, the same should be applied to benchmark the transactions. 3.3 However, Ld. DRP chose to confirm the approach of Ld. TPO. The only relief granted was on account of applicable rate and Ld. TPO was directed to benchmark the same on the basis of interest rates on short term fixed deposits prevailing at relevant point of time. The IT(TP)A No.100/Chny/2024 Page - 7 - of 13 said directions reduced the impugned adjustment to Rs.25.11 Lacs. Aggrieved, the assessee is in further appeal before us. 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…”. 5.3 Further, on the impugned issue the Hon’ble Coordinate Bench of this Tribunal in its latest decision in the case of Temenos India Pvt. Ltd for Assessment Year: 2020-21 vide IT(TP)A No.: 32/CHNY/2024 has ruled as under:- “….8. The ld.AR’s first contention was that the assessee company being a debt free company, no adjustment is warranted as interest imputation on outstanding trade receivables from its AE’s. In this context, the ld.AR relied on the Hon’ble Supreme Court judgment in the case of PCIT vs. Bechtel India Pvt. Ltd., in CC No.4956/2017/SC (judgment dated 21.07.2017). The second contention of the ld.AR was that the TPO / DRP ought to have granted working capital adjustment and factoring the impact of receivables on working capital, no separate adjustment is required on trade receivables. In - 8 - IT(TP)A No.32/CHNY/2024 this context, the ld.AR placed reliance on the following judicial pronouncements:- i) Kusum Healthcare Pvt. Ltd., in ITA 765/2016 (Delhi HC) ii) Doosan Power Systems India Pvt. Ltd., in ITA No.2/CHNY/2020 (Chennai Bench, ITAT) iii) Infac India P. Ltd., in IT(TP)A No.27/CHNY/2018 (Chennai Bench, ITAT) iv) CMA CGM Shared Service Centre (India) Pvt. Ltd., in IT(TP)A No.76/CHNY/2018 (Chennai Bench, ITAT) v) Foxteq Services India in ITA No.174/Mds/2016 (Chennai Bench, ITAT) 9. Lastly, it was contended that the credit period of 30 days given by the TPO is adhoc, arbitrary and completely ignore the credit period as per inter-company agreement of 180 days, the credit period that is given to the comparable companies and various judicial pronouncements allowing credit period of 90 to 120 days. 10. The ld.DR supported the orders of the TPO and the DRP. 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 - 9 - IT(TP)A No.32/CHNY/2024 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 IT(TP)A No.100/Chny/2024 Page - 8 - of 13 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 - 10 - IT(TP)A No.32/CHNY/2024 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:- 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 - 11 - IT(TP)A No.32/CHNY/2024 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 - 12 - IT(TP)A No.32/CHNY/2024 ITA No.7234/Del/2017 (order dated 18.12.2020) had discussed the conflicted saga of Bechtel cases concerning Assessment Year 201011 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 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 IT(TP)A No.100/Chny/2024 Page - 9 - of 13 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 TS129-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 - 13 - IT(TP)A No.32/CHNY/2024 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 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 201213 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 IT(TP)A No.100/Chny/2024 Page - 10 - of 13 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 - 14 - IT(TP)A No.32/CHNY/2024 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: “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 interst 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. - 15 - IT(TP)A No.32/CHNY/2024 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 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 IT(TP)A No.100/Chny/2024 Page - 11 - of 13 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). - 16 - IT(TP)A No.32/CHNY/2024 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, we direct the Ld. AO/TPO to delete the transfer pricing adjustment on account of the interest - 17 - IT(TP)A No.32/CHNY/2024 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 IT(TP)A No.100/Chny/2024 Page - 12 - of 13 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 - 18 - IT(TP)A No.32/CHNY/2024 of Rs.3,14,15,287/-, Ground No. 2 and its other sub-grounds are not adjudicated. It is ordered accordingly….” 5.4 In the cases of Tecnimont Pvt Ltd (ITA 56/Bom/2016) Hon’ble Bombay High Court and this Hon’ble Tribunal in the case of Verizon Data Services Pvt Ltd (ITA 3411/Chny/2016) and Plintron Global Technologies Solutions have held that receivables from overseas entities, have to be only charged to interest as per LIBOR rate. Consequently, the appellant assessee has assailed the additional adjustments of 3.5% to the LIBOR rate made by the Ld. AO. 6.0 We are therefore of the considered view that considering the facts the appellant assessee, as well as in respectful compliance to the decisions of Hon’ble High Courts and Coordinate Benches of the Tribunal including this tribunal, there is no merit in the action of the Revenue in making the impugned addition by way of adjustment proposed by the Ld.TPO. Accordingly, we set aside the order of the lower authorities and direct the Ld.AO to delete the addition of Rs.50,78,859/-. Therefore, all the grounds of appeal raised by the assessee are allowed….” 8.0 We have noted that the facts of the present case are akin to those available in the judicial precedents discussed hereinabove. Accordingly in respectful compliance to the same, we are of the view that no case of charging any interest on outstanding receivables is made out in favour of revenue. The order of lower authorities is therefore, set aside and the IT(TP)A No.100/Chny/2024 Page - 13 - of 13 learned AO is directed to delete impugned addition of Rs.2,59,85,448/- on account of interest on outstanding trade receivables. All the grounds of appeal raised by the assessee on this issue are therefore, allowed. 9. In the result, appeal of the assessee is allowed. Order pronounced on 14th , May, 2025 at Chennai. Sd/- (एबी टी. वर्की) (ABY T VARKEY) न्याधयक सदस्य / Judicial Member Sd/- (अधमताभ शुक्ला) (AMITABH SHUKLA) लेखा सदस्य /Accountant Member चेन्नई/Chennai, धदनांक/Dated: 14th May, 2025. KB/- आदेश की प्रतितिति अग्रेतिि/Copy to: 1. अिीिार्थी/Appellant 2. प्रत्यर्थी/Respondent 3. आयकर आयुक्त/CIT - Chennai 4. तिभागीय प्रतितिति/DR 5. गार्ड फाईि/GF "