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ITAT ruled against the TPO's adjustment regarding interest on outstanding receivables from associated enterprises. The Tribunal determined the transactions were not "international transactions" under transfer pricing regulations as the assessee was properly compensated by its AE, maintained a debt-free status, and had no actual finance costs related to borrowings. The average credit period of 92 days fell below the industry average of 105 days, indicating no excessive delay in remittances that would suggest the AE was enjoying unreasonable credit facilities. Following Bechtel India precedent, ITAT concluded the revenue failed to demonstrate any benefit transfer to the AE and directed deletion of the proposed additions.
ITAT ruled against the TPO's adjustment regarding interest on outstanding receivables from associated enterprises. The Tribunal determined the transactions were not "international transactions" under transfer pricing regulations as the assessee was properly compensated by its AE, maintained a debt-free status, and had no actual finance costs related to borrowings. The average credit period of 92 days fell below the industry average of 105 days, indicating no excessive delay in remittances that would suggest the AE was enjoying unreasonable credit facilities. Following Bechtel India precedent, ITAT concluded the revenue failed to demonstrate any benefit transfer to the AE and directed deletion of the proposed additions.
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