Income Tax Appellate Tribunal - Bangalore
Ale India Private Limited,Bangalore vs Deputy Commisioner Of Income Tax Circle ... on 16 April, 2026
IN THE INCOME TAX APPELLATE TRIBUNAL
'C' BENCH, BANGALORE
BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND
SHRI SOUNDARARAJAN K, JUDICIAL MEMBER
ITA No.138/Bang/2026
Assessment Year: 2022-23
ALE India Private Limited, Vs. The Dy. Commissioner of
Brigade Magnum, Unit No.B-G01, Income Tax,
Amruthahalli Village Kodigehalli Post, Circle - 1(1)(1),
Bangalore - 560 092. Bangalore.
PAN - AAMCA 7643 J
APPELLANT RESPONDENT
Assessee by : Shri B Rama Krishnan CA &
Smt. Hemalata K, C.A
Revenue by : Dr. Divya K.J, CIT (DR)
Date of hearing : 16.03.2026
Date of Pronouncement : 16.04.2026
ORDER
PER WASEEM AHMED, ACCOUNTANT MEMBER:
The present appeal has been instituted by the assessee against the final assessment order passed by the Ld. AO/TPO u/s 143(3) r.w.s. 144C(13) of the Act dated 18.12.2025 pursuant to the directions of the Ld. DRP for AY 2022-23.
2. The assessee has raised multiple grounds of appeal in respect of transfer pricing adjustment relating to software development services ITA No.138/Bang/2026 Page 2 of 17 and interest on receivables. For the sake of brevity, the same are not reproduced here.
3. Ground No. 1 is general in nature and do not call for any specific adjudication. Accordingly, the same is dismissed.
4. The issues raised in Ground Nos. 2 to 25 are interconnected and pertains to fresh economic analysis conducted by the TPO and inclusion and exclusion of certain comparables by the TPO and by the Ld. DRP for computing the ALP of the international transactions carried out by the assessee with the AE.
4.1 The relevant facts are that the assessee is a wholly owned subsidiary of ALE Holding, France and is engaged in the business of providing software development services to its Associated Enterprises in the field of telecommunications and network solutions. During the year under consideration, the assessee entered international transactions aggregating to approximately Rs. 59.47 crores with its AEs.
4.2 The assessee benchmarked these transactions by adopting the Transactional Net Margin Method as the most appropriate method taking OP/OC as the PLI. Based on a set of five comparables, the assessee arrived at a margin of 8% and concluded that its international transactions were at arm's length.
4.3 However, the TPO during the assessment proceeding rejected all the comparables selected by the assessee and selected 22 additional comparables. The final TPO's comparables are detailed as under:
ITA No.138/Bang/2026 Page 3 of 171. Harbinger Systems Pvt. Ltd.
2. Evoke Technologies Pvt. Ltd.
3. Infomile Technologies Limited
4. Indianic Infotech Ltd.
5. C E S Ltd.
6. Orion India Systems Pvt. Ltd.
7. Sagarsoft (India) Ltd.
8. Nintec Systems Ltd.
9. Apttus Software Pvt. Ltd.
10. Mindtree Ltd. (Merged)
11. Q S G Technologies Pvt. Ltd.
12. LTIMindtree Ltd.
13. Happiest Minds Technologies Ltd.
14. Wipro Ltd.
15. Systango Technologies Ltd.
16. Infosys Ltd.
17. Tata Elxsi Ltd.
18. Robosoft Technologies Pvt. Ltd.
19. Tata Consultancy Services Ltd.
20. IDS Infotech Ltd.
21. CG-VAK Software & Exports Ltd.
22. Cybage Software Pvt. Ltd.
4.4 The average PLI/margin of the comparables companies was computed at around 23%, resulting in an upward adjustment of approximately Rs. 7.10 crores to the total income of the assessee.
Aggrieved assessee filed objections before the Ld. DRP. Before the Ld. DRP, the assessee submitted that the turnover of many comparables exceeds Rs. 600 crores. The list of such comparables stands as under:
S.No. Name of Comparable T/O in Rs. Crores
1. Apttus Software Pvt. Ltd. 1,098.46
2. Mindtree Ltd. (Merged) 10,552.90
3. LTIMindtree Ltd. 16,135.40
4. Happiest Minds Technologies Ltd. 1,130.75
5. Wipro Ltd. 64,280.50
6. Infosys Ltd. 1,23,936.00
ITA No.138/Bang/2026
Page 4 of 17
7. Tata Elxsi Ltd 2,515.33
8. Tata Consultancy Services Ltd. 1,95,772.00
9. Cybage Software Pvt. Ltd. 1,730.07
4.5 As such, the comparables selected by the TPO have turnover
more than 600 crores which is more than 10 times of the assessee's turnover i.e. 59.47 crores only. The TPO, while applying the filters, himself has excluded companies with turnover below Rs. 1 crore stating that they may not represent industry trend. In this regard, assessee submitted that TPO is not justified in applying lower limit for turnover filter without applying the upper limit. The assessee also placed reliance on several judgments in this regard.
4.6 However, the Ld. DRP rejected the plea of assessee by contending that turnover does not have any impact on the profitability of software companies. The Ld. DRP relied on various judicial precedents including the case of Societe Generale Global Solution Centre (P.) Ltd. Bang ITAT reported in [2016] 69 taxmann.com 336.
5. Aggrieved by the order of the AO/ direction of the ld. DRP, the assessee preferred an appeal before us.
6. The Ld. AR before us has filed a paper book running from page 1 to 141, case law compilation running from page 1 to page 552, one page chart regarding exclusion of comparables, summary of arguments. The assessee regarding turnover filter submitted that the TPO has considered companies having high turnover in selecting the comparable companies, thus failed to apply the turnover filter used by the assessee in its TP ITA No.138/Bang/2026 Page 5 of 17 Study Document to exclude companies having turnover more than the limit i.e. 10 times and those with less than 1/10th of the turnover of the tested party. The assessee placed reliance on various judicial precedents of Hon'ble Bombay Hight Court and jurisdictional ITAT cases.
7. The Ld. DR, on the contrary, strongly supported the order of the TPO and the DRP. It was submitted that the TPO has adopted a scientific and reasonable approach while selecting the comparable companies and that the turnover filter applied by the assessee is arbitrary and not supported by any statutory provision. The Ld. DR contended that turnover, by itself, cannot be a decisive factor for exclusion unless it is demonstrated that such difference materially affects the profit margins. It was further argued that the companies selected by the TPO are functionally comparable to the assessee and, therefore, no interference is called for. The Ld. DR also distinguished the judicial precedents relied upon by the assessee and submitted that each case must be decided on its own facts.
8. We have heard the rival submissions of both the parties and perused the materials available on record. Regarding to the companies/ comparables to be excluded on the basis of turnover, we note that it is well settled that turnover is a relevant criterion for determining comparability, as the scale of operations has a direct bearing on profitability owing to economies of scale. Companies having significantly higher turnover enjoy cost efficiencies and market advantages which are not available to smaller entities.
ITA No.138/Bang/2026 Page 6 of 178.1 It is pertinent to note that companies with very high turnover operate on a different scale and benefit from economies of scale, better market position and cost advantages, which directly affect their profitability. Size of the company is a recognized factor for comparability, as differences in turnover and market share influence pricing and margins. Though in our considered view turnover filters cannot be applied mechanically and must depend on the facts of each case, keeping in mind the turnover of the tested entity. The purpose is to select companies with a broadly similar scale of operations, assets and risk profile. This approach is in line with the OECD Transfer Pricing Guidelines in para 3.43 which states that Size criteria in terms of Sales, Assets or Number of Employees. The size of the transaction in absolute value or in proportion to the activities of the parties might affect the relative competitive positions of the buyer and seller and therefore comparability. Similarly, the guidance notes on transfer pricing issued by ICAI in para 5.50 states that under TNMM where margins are to be compared, the margin of a 1,000 crores company cannot be compared with that of a 10 crores company. The two most obvious reasons are the size of the two companies and the relative economies of scale under which they operate.
8.2 Further paragraph 15.4 of the ICAI Guidance Note on Transfer Pricing emphasizes significant differences in company size and turnover, such as comparing Rs. 1,000 crore entity to a Rs. 10 crore entity materially affects profitability and comparability under Rule 10B(2) of Income Tax Rule.
ITA No.138/Bang/2026 Page 7 of 178.3 In the present case, the assessee's turnover from software development services is Rs. 59.47 crores, whereas several of the comparables selected by the TPO have substantially higher turnover. In such circumstances, the application of an upper turnover filter becomes necessary to ensure a fair comparison. The Tribunal has taken a consistent view that large or medium scale companies with substantially higher turnover cannot be compared. For the ready reference, the view taken by the coordinate bench of this Tribunal in Autodesk India (P) Ltd. v. DCIT reported in (2018) 96 taxmann.com 263 reads as under:
"17.7. We have considered the rival submissions. The substantial question of law (Question No. 1 to 3) which was framed by the Hon'ble Delhi High Court in the case of Chryscapital Investment Advisors (India) (P.) Ltd., (supra) was as to whether comparable can be rejected on the ground that they have exceptionally high profit margins or fluctuation profit margins, as compared to the Assessee in transfer pricing analysis. Therefore as rightly submitted by the Ld. counsel for the Assessee the observations of the Hon'ble High Court, in so far as it refers to turnover, were in the nature of obiter dictum. Judicial discipline requires that the Tribunal should follow the decision of a non-jurisdiction High Court, even though the said decision is of a non-jurisdictional High Court. We however find that the Hon'ble Bombay High Court in the case of CIT v. Pentair Water India (P.) Ltd. Tax Appeal No. 18 of 2015 judgment dated 16-9-2015 has taken the view that turnover is a relevant criterion for choosing companies as comparable companies in determination of ALP in transfer pricing cases. There is no decision of the jurisdictional High Court on this issue. In the circumstances, following the principle that where two views are available on an issue, the view favourable to the Assessee has to be adopted, we respectfully follow the view of the Hon'ble Bombay High Court on the issue. Respectfully following the aforesaid decision, we uphold the order of the DRP excluding 5 companies from the list of comparable companies chosen by the TPO on the basis that the 5 companies turnover was much higher compared to that the Assessee.
17.8. In view of the above conclusion, there may not be any necessity to examine as to whether the decision rendered in the case of Genisys Integrating (supra) by the ITAT Bangalore Bench should continue to be followed. Since arguments were advanced on the correctness of the decisions rendered by the ITAT Mumbai and Bangalore Benches taking a view contrary to that taken in the case of Genisys Integrating (supra), we proceed to examine the said issue also. On this issue, the first ITA No.138/Bang/2026 Page 8 of 17 aspect which we notice is that the decision rendered in the case of Genisys Integrating (supra) was the earliest decision rendered on the issue of comparability of companies on the basis of turnover in Transfer Pricing cases. The decision was rendered as early as 5-8-2011. The decisions rendered by the ITAT Mumbai Benches cited by the Ld. DR before us in the case of Willis Processing Services (supra) and Capegemini India (P.) Ltd. (supra) are to be regarded as per incurium as these decisions ignore a binding co-ordinate bench decision. In this regard the decisions referred to by the Ld. counsel for the Assessee supports the plea of the Ld. counsel for the Assessee. The decisions rendered in the case of M/S.NTT Data (supra), Societe Generale Global Solutions (supra) and LSI Technologies (supra) were rendered later in point of time. Those decisions follow the ratio laid down in Willis Processing Services (supra) and have to be regarded as per incurium. These three decisions also place reliance on the decision of the Hon'ble Delhi High Court in the case of Chriscapital Investment (supra). We have already held that the decision rendered in the case of Chriscapital Investment (supra) is obiter dicta and that the ratio decidendi laid down by the Hon'ble Bombay High Court in the case of Pentair (supra) which is favourable to the Assessee has to be followed. Therefore, the decisions cited by the Ld. DR before us cannot be the basis to hold that high turnover is not relevant criteria for deciding on comparability of companies in determination of ALP under the Transfer Pricing regulations under the Act. For the reasons given above, we uphold the order of the CIT(A) on the issue of application of turnover filter and his action in excluding companies by following the ratio laid down in the case of Genisys Integrating (supra)".
8.4 Further, we find that this Tribunal subsequently in the case of Robert Bosch Engineering and Business Solutions Pvt. Ltd. vs. DCIT in IT(TP)A No. 593/Bang/2020 followed the decision in the case of Autodesk India (P) Ltd. (Supra) and excluded the company with turnover exceeding 200 crores from the comparable set. Against the order of the Tribunal, the revenue filed an appeal before the Hon'ble Karnataka High Court in ITA No. 146/2025. In the said case, the Hon'ble High Court did not admit the Revenue's grounds of appeal on this issue by observing as under:
"10. Indisputably, a company that has a significantly large turnover cannot be considered as a comparable with an assessee, whose turnover is a small fraction of that of the said entity.ITA No.138/Bang/2026 Page 9 of 17
11. The question whether the entities are comparable is required to be determined on the basis of similar FAR [Functions, Assets and Risks] profile. It would be erroneous to assume that the size of an entity and its turnover has no bearing on the FAR profile. It is erroneous to suggest that a company of a huge size and a large turnover would be subjected to the same risks as that of a smaller entity, whose turnover is a small fraction of the other entity. The entities would also not be comparable when one considers the value of assets. Additionally entities having a large turnover, would have the benefit of economies of scale, which would not be available to companies with a relatively lower turnover.
8.5 The Hon'ble High Court has categorically observed that a company having significantly large turnover cannot be compared with a small entity and that size and turnover have a direct bearing on FAR analysis, asset base, risk profile and economies of scale.
8.6 Likewise, we also find that the Hon'ble Jurisdictional High Court of Karnataka also taken similar view in the case of CIT vs. Yodlee Infotech (P.) Ltd. reported in 111 taxmann.com 121 and has dismissed the revenue ground of appeal on the issue of exclusion of comparable companies with turnover exceeding Rs. 200 cores. The relevant question raised by the Revenue and finding of the bench reads as under:
(2) Whether on the facts and in the circumstances of the case the Tribunal is right in law in accepting the claim of assessee to adopt turnover filter of Rs.200 Crores following the decision of Co-ordinate Bench in the case of M/s. Genisys Pvt. Ltd v. DCIT reported in 64 DTR page 225 even when said decision has not reached finality and without appreciating that the turnover is not a relevant filter in the software industry, as the size of the turnover and margins are not linked and the Economics of scale are relevant factor only in capital intensive companies which have substantive fixed assets in the form of plant and machinery?
Regarding substantial question of law No.2:
"20. We have to hold that assessee can seek exclusion of comparables which were a part of its own list, at a later stage, and therefore, we are constrained to reject the line of argument of the learned DR. Coming to ITA No.138/Bang/2026 Page 10 of 17 the arguments of the learned AR that M/s Tata Elxsi Ltd., M/s Sasken Communication Ltd., M/s Persistent Systems Ltd., M/s L & T Infotech and M/s Infosys Ltd., had turnover in excess of Rs. 200 Crores and were to be excluded, we are of the opinion that turnover filter can be applied for selection of comparables. This has been the view consistently taken by the Co-ordinate Benches of this Tribunal in a number of cases. In the case of M/s Genisys (P.) Ltd. v. DCIT [2011] 64 DTR 225 it was held by this Tribunal as under at paras-8 to 09 of its order:
8. According to learned counsel for the assessee size is an important fact of an enterprise level difference. He submitted that comparables should have something similar or equivalent and should possess same or almost the same characteristics. To use a simile, he submitted that a Maruti 800 car cannot be compared to a Benz car, even though both are cars only. He submitted that unusual pattern, stray cases, wide disparities have to be eliminated as they do not satisfy the test of comparability. Companies operating on large scale benefit from economies of scale, higher risk taking capabilities, robust delivery and business models as opposed to the smaller or medium sized companies and therefore, size matters. Two companies of dissimilar size therefore, cannot be assumed to earn comparable margins and the impact of difference in size could be removed by a quantitative adjustment to the margins or price being compared if it is possible to do so reasonably accurately. He submitted that size as one of the selection criteria has also been approved by various Benches of the Tribunal, in the following cases:
8.1 He further submitted that size as a criteria for selection of comparables is also recommended by OCED in its TP guidelines. The observation of OCED in para 3.43 of the chapter on guidelines reads as follows:
** ** ** 8.2 The learned counsel for the assessee submitted that similar observations were also made by ICAI in para 15.4 of TP guidance note.
He submitted that TPO's range of Rs. 1 crore to infinity has resulted in selection of companies like M/s Infosys which is having a turnover of Rs. 9,028 crores which is 1,1007 times bigger than the assessee company which has a turnover of Rs. 8.15 crores. He further submitted that NASSCOM has also categorized the companies based on the turnover as follows:
8.3 The learned Departmental Representative rebutted this argument and submitted that the Act or Rules does not provide for the turnover filter. He submitted that as rightly pointed out by the TPO in the case of service sector, the size of the company does not matter because, the infrastructure layout is very less and it will not affect the profit ratio in any way. He drew out attention to the particular portion of TPO's order ITA No.138/Bang/2026 Page 11 of 17 wherein the TPO has the reasoning given for rejecting the turnover filter.
9. Having heard both the parties and having considered the rival contentions and also the judicial precedents on the issue, we find that the TPO himself has rejected the companies which are making losses as comparables. This shows that there is a limit for the lower end for identifying the comparables. In such a situation, we are unable to understand as to why there should not be an upper limit also. What should be upper limit is another factor to be considered. We agree with the contention of the learned counsel for the assessee that the size matters in business. A big company would be in a position to bargain the price and also attract more customers. It would also have a broad base of skilled employees who are able to give better output. A small company may not have these benefits and therefore, the turnover also would come down reducing profit margin. Thus, as held by the various Benches of the Tribunal, when companies which are loss making are excluded from comparables, then the super profit making companies should also be excluded. For the purpose of classification of companies on the basis of net sales or turnover, we find that a reasonable classification has to be made. Dun & Bradstreet and NASSCOM have given different ranges. Taking the Indian scenario into consideration, we feel that the classification made by Dun & Bradstreet is more suitable and reasonable. In view of the same, we hold that the turnover filter is very important and the companies having a turnover of Rs. 1 Crore to Rs. 200 crores have to be taken as a particular range and the assessee being in the range having turnover of Rs. 8.15 crores, the companies which also have turnover of Rs. 1 to Rs. 200 crores only should be taken into consideration for the purpose of making TP study."
The appeal filed by the Revenue against the judgment of the Hon'ble Tribunal in the case of Genisys (P.) Ltd. v. Dy.CIT [2011] 64 DTR 225 has been considered by this Court in ITA No.17/2012 and the same has been dismissed on 09.07.2018 as no substantial questions of law arose for consideration.
8.7 In view of the above detailed discussion and after relying on the judicial discipline supra, we note that the turnover of the companies viz.
S. No. Name of Comparable T/O in Rs. Crores
1. Apttus Software Pvt. Ltd. 1,098.46
2. Mindtree Ltd. (Merged) 10,552.90
3. LTIMindtree Ltd. 16,135.40
4. Happiest Minds Technologies Ltd. 1,130.75
ITA No.138/Bang/2026
Page 12 of 17
5. Wipro Ltd. 64,280.50
6. Infosys Ltd. 1,23,936.00
7. Tata Elxsi Ltd 2,515.33
8. Tata Consultancy Services Ltd. 1,95,772.00
9. Cybage Software Pvt. Ltd. 1,730.07
are far higher than that of the assessee company. Hence, the same are liable to be deleted from the list of comparable companies. Thus, the ground of appeal of the assessee is allowed.
8.8 Before parting, it is important to note that there were other grounds raised by the assessee relating to the exclusion of certain comparables on the reasoning of non-functionality with the assessee, but the same were not pressed at the time of hearing. Accordingly, such grounds of appeal of the assessee are hereby dismissed as infructuous.
9. Ground Nos. 26 to 30 are interconnected and relates to notional interest on outstanding trade receivables.
9.1 The relevant facts of the case are that the TPO treated the delay in realization of trade receivables from the AEs as unsecured loans advanced to the AEs and, accordingly, computed notional interest for the period of such delay during the year under consideration. In doing so, the Ld. TPO placed reliance on the provisions of section 92B of the Act, wherein the definition of "international transaction" has been expanded to include capital financing transactions arising in the course of business. The Ld. TPO computed notional interest on the average receivables of the assessee for the captioned AY by applying the LIBOR+450 bps, after ITA No.138/Bang/2026 Page 13 of 17 allowing a credit period of 60 days, and determined the total upwards adjustment at Rs. 27,44,973/- only by adding to the total Income of the assessee.
10. Aggrieved, the assessee filed objections before the Ld. DRP.
11. Before the Ld. DRP, the assessee submitted the interest on delayed receivables should not be considered as a separate international transaction on the reasoning being they represent only a consequence of the principal international transaction i.e. sales.
12. The assessee, without prejudice, also contended that since the invoices are raised in foreign currency, interest computation, if any, ought to be made shall be made with reference to LIBOR Rates.
12.1 The Ld. DRP, with regard to contention of the assessee regarding whether the interest on delayed receivables constitutes a separate international transaction, observed that the amendment inserted by way of Explanation to sec. 92B of the Act, the term 'internation transaction' would specifically include within its ambit "deferred payment or receivable or any other debt arising during course of business..." and hence, non-charging or under-charging of interest on excess period of credit allowed to the AE for the realization of invoices would amount to an international transaction. The Ld. DRP further relied on plethora of judicial precedents in this regard. The Ld. DRP further upheld the action of the ld. TPO in treating the interest on receivables as an international transaction and in taking LIBOR+450 bps rate.
ITA No.138/Bang/2026 Page 14 of 1713. Aggrieved by the order of the AO/TPO and the direction of ld. DRP, the assessee preferred an appeal before us.
14. The Ld. AR before us submitted that trade receivables should not be treated as a separate international transaction and no interest should be imputed on the same. It was submitted that the TPO has wrongly treated the outstanding trade receivables as if they were unsecured loans advanced to the AEs and accordingly computed interest on such receivables amounting to Rs. 27,44,973/- only.
14.1 The assessee further submitted that the TPO has computed interest by adopting the SBI PLR rate. It was submitted that all invoices during the relevant assessment year were raised in foreign currency. Therefore, if any adjustment is warranted, the rate applicable to foreign currency denominated transactions, i.e., LIBOR, should be applied and not the domestic SBI PLR rate.
14.2 The assessee further submitted that, initially, the agreed credit period between the assessee and its AEs was 30 days; however, the same was subsequently revised to 90 days.
14.3 Without prejudice, the assessee submitted that if at all interest is to be computed, the same should be done by applying LIBOR plus 300 basis points, as held in several judicial precedents. Accordingly, the assessee requested to direct the TPO to recompute the interest on trade receivables by applying LIBOR plus 300 basis points.
ITA No.138/Bang/2026 Page 15 of 1715. On the other hand, the Ld. DR before us submitted that the TPO has rightly treated the outstanding receivables from AEs as a separate international transaction in view of the Explanation inserted to section 92B of the Act, which specifically includes deferred payments or receivables arising during the course of business.
15.1 The Ld. DR further submitted that the assessee has failed to produce any documentary evidence to substantiate its claim regarding agreed credit period of 30 or 90 days. In absence of any inter-company agreement, invoice terms or supporting correspondence, such contention cannot be accepted. It was argued that onus lies on the assessee to demonstrate the agreed credit terms, which has not been discharged.
16. We have considered the rival submissions of both the parties and perused the materials available on record. The assessee has contended that the agreed credit period was initially 30 days and later revised to 90 days. However, we find that no documentary evidence has been placed on record to support this claim. The assessee has not furnished any inter-company agreement, amendment thereto, invoice terms, email correspondence, or any contemporaneous document to establish that such credit terms were agreed between the parties.
16.1 In transfer pricing matters, the terms of transaction between the assessee and its AEs are of primary importance and must be supported by proper documentation. Mere statements or submissions made during appellate proceedings, without any supporting evidence, cannot be relied upon. The burden lies on the assessee to demonstrate the actual terms ITA No.138/Bang/2026 Page 16 of 17 governing the transaction, especially when such terms are used to contest a TP adjustment.
16.2 In the absence of any consistent and verifiable material, the claim of the assessee cannot be accepted. Accordingly, in absence of any reliable documentary evidence, we reject the contention of the assessee on this issue.
16.3 Having said so, we now turn to the rate of interest adopted by the TPO and upheld by the Ld. DRP, being LIBOR plus 450 basis points. In this regard, we find force in the following judicial precedents in the jurisdictional Bangalore ITAT in the case of Synechron Technologies (P.) Ltd vs. ACIT [2025] 175 taxmann.com 404 (Bangalore - Trib.) [04-06- 2025]. The relevant para is reproduced below:
"We have heard the rival submissions and perused the materials available on record. So far as the argument of assessee that the transaction of outstanding receivables is not an international transaction, we do not find any force in this argument because now there are so many judgements on this issue, wherein it has been held that the transactions of outstanding receivables is an international transaction. So far as the applicability of rate is concerned, we observe that TPO has erred in applying LIBOR+450 basis points as a rate of interest, therefore, we modify this rate of interest to the tune of LIBOR+200 basis points, in the interest of justice and direct the TPO to calculate the interest attributable to the outstanding receivables accordingly."
16.4 Accordingly, we direct the TPO to recompute the interest on delayed receivables, if any, by adopting LIBOR plus 200 basis points. Therefore, this ground of appeal of the assessee is partly allowed.
ITA No.138/Bang/2026 Page 17 of 1717. In the result, the appeal of assessee is partly allowed.
Order pronounced in court on 16th day of April, 2026 Sd/- Sd/-
(SOUNDARARAJAN K) (WASEEM AHMED)
Judicial Member Accountant Member
Bangalore
Dated, 16th April, 2026
/ vms /
Copy to:
1. The Applicant
2. The Respondent
3. The CIT
4. The CIT(A)
5. The DR, ITAT, Bangalore.
6. Guard file
By order
Asst. Registrar, ITAT, Bangalore