INCOME TAX ACT, 1961

Section 92B

Transfer pricing - International transaction - Outstanding receivables from AE beyond stipulated period of 90 days - Credit period of 90 days was less than credit period of 90 to 120 days of comparables

Assessee rendered Software Development Services to AEs TPO treated outstanding receivables from AE beyond stipulated period of 90 days as international transaction and suggested ALP adjustment on acount of interest due on outstanding receivables. Held: Assessee during the year under consideration had not availed any loan from AEs or unrelated third parties and was not incurring any interest cost. Agreement between assessee and its AE vis-a-vis terms of payment within stipulated period of 90 days could not form basis for holding existence of International transaction between assessee and its AE, where outstanding was not received within stipulated period. In any case, credit period of 90 days was less than credit period of 90 to 120 days of comparables and no adjustment was warranted. Hence, there was no merit in making any adjustment on account of interest due on receivable from its AE.

Followed:Pr.CIT v. Kusum Health Care (P) Ltd. ITA No. 765/2016, judgment, dated 25-4-2017] : 2017 TaxPub(DT) 4367 (Del-HC). Supported by: Global Logic India Ltd., (formerly known as Global Logic India Private Limited) v. Dy. CIT [ITA No. 1115/Del/2017 Order, dated 12-12-2017] : 2018 TaxPub(DT) 68 (Del-Trib).