Tribunal Rules Interest on Outstanding Receivables Requires Separate Benchmarking for Transfer Pricing Adjustment.

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....The ITAT Hyderabad addressed a Transfer Pricing (TP) Adjustment issue regarding interest on outstanding receivables, determining if it constitutes an international transaction. Referring to the amendment to Section 92B of the Act by the Finance Act, 2012, the Tribunal held that interest on outstanding receivables is indeed an international transaction requiring separate benchmarking. The Tribunal noted that the DRP directed the AO to use the SBI short-term deposit interest rate as the Arm's Length Price (ALP) interest rate and adjust income based on a credit period of thirty days or as per the agreement/invoice. The Tribunal directed the AO/TPO to compute the interest rate on similar foreign currency receivables/advances as LIBOR+200 points.........