TaxTMI 
TaxTMI 
2026 (8) TMI 1548
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....essment order dated 17/10/2023 making an adjustment of Rs. 2,88,40,649 towards interest on outstanding receivables on the recommendation of Ld. TPO u/s. 92CA is bad in law. 2. Ld.TPO/Ld.CIT(A), Hyderabad failed to appreciate that primary international transactions of ITES with its AE were found to be at Arm's Length and a separate adjustment towards interest on outstanding receivables gets subsumed in ALP. 3. Ld.TPO/Ld.CIT(A), Hyderabad failed to appreciate that the trade receivables and the credit period are closely linked with the provision of ITES and the assessee factored in the credit period while determining the sale price. Thereby no interest on outstanding receivables to be charged. 4. Ld.TPO/Ld.CIT(A)....
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....m of Rs. 92,62,43,280/- for providing Information Technology Enabled Services [in short "ITES"]. The assessee adopted Transactional Net Margin Method [in short "TNMM"] as most appropriate method while benchmarking its international transactions and selected 19 comparables with operating profit between 13.9% to 20.40% with a median of 17.6% in comparison to the assessee's Profit Level Indicator [in short "PLI"] [OP/OC] at14.47%. The TPO accepted the main international transactions of ITES services to AE at arm's length. However, the TPO has made an adjustment on account of interest on outstanding receivables from AE by applying SBI short term deposit rate at 5.75%. On appeal, the learned CIT(A) restricted the said adjustment by applying ....
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...., credit period allowed to the AE includes the price charged by the assessee from the AE and no separate adjustment can be made on this account. He has also relied upon the following decisions: (i) Order of ITAT, Mumbai in the case of ACIT, Circle-2(2), Mumbai vs. Information Systems Resources Center (P) Ltd., [2015] 42 ITR (T) 203 (Mumbai); (ii) Order of ITAT, Ahmedabad in the case of ACIT vs. Intas Pharmaceuticals Ltd. [2025] 174 taxmann.com 867 (Ahmedabad - Tribunal); (iii) Order of ITAT, Ahmedabad in the case of Milacron India (P.) Ltd. vs. DCIT [2025] 174 taxmann.com 800 (Ahmedabad - Trib.); (iv) Order of ITAT, Mumbai in the case of Hindustan Unilever Ltd. vs. DCIT [2024] 169 taxmann.com 117 (Mumbai-....
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....taxpayer company is engaged in the business of proving legal support services to its clients." 5.1. The assessee has reported international transactions with its AE total amounting to Rs. 92,62,43,280/- which is benchmarked by the assessee in the TP study document as recorded by the TPO in Para no.3.2 as under: Nature of international transactions Most appropriate method Book value of transaction (Amt in INR) Margin Type Arm's length range Provision of IT enabled services TNMM OP/OC 92,62,43,280 14.14% Indian companies engaged in providing similar services Range between 35th: 13.90% 65% : 20.40% Median: 17.60% Total 92,62,43,280 5.2. Thus, the assessee h....
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....then, even if the discounted price charged by the assessee is taken into account after making the adjustment on account of the outstanding receivables, the price charged by the assessee is still more than the ALP or at par with the ALP that means it is either equally or more than the comparable price then, there would be no rational for making a separate adjustment on account of outstanding receivables as the same has already subsumed in the price charged by the assessee from the AE. However, in case in hand, the price charged by the assessee is below the uncontrolled and independent price being ALP but due to the tolerance range, no adjustment is made on the main international transactions that would not lead to the conclusion that price c....