Income Tax Appellate Tribunal - Chennai
C.H. Robinson Worldwide Freight India ... vs Dcit, Corporate Circle-1(1), Chennai on 4 May, 2026
आयकर अपीलीय अधिकरण, 'डी' न्यायपीठ, चेन्नई
IN THE INCOME TAX APPELLATE TRIBUNAL
'D' BENCH, CHENNAI
श्री जॉजज जॉजज के, उपाध्यक्ष एवं श्री एस.आर.रघुनाथा, लेखा सदस्य के समक्ष
BEFORE SHRI GEORGE GEORGE K, VICE PRESIDENT AND
SHRI S.R. RAGHUNATHA, ACCOUNTANT MEMBER
आयकर अपील सं./IT(TP)A Nos.: 63 & 102/Chny/2024 &
ITA No.: 2533/Chny/2024
ननिाजरण वर्ज / Assessment Years: 2020-21 & 2021-22
C.H. Robinson Worldwide The Deputy Commissioner of
Freight India Pvt Ltd., vs. Income Tax,
Pottipatti Plaza, Corporate Circle -1(1),
77 Nungambakkam High Road, Chennai.
Nungambakkam S.O.,
Nungambakkam,
Chennai - 600 034.
[PAN: AACCC-9617-L]
(अपीलाथी/Appellant) (प्रत्यथी/Respondent)
अपीलाथी की ओर से/Appellant by : Shri. Kamal Sawhney, Advocate
प्रत्यथी की ओर से/Respondent by : Shri. M.K.Biju, CIT
सन
ु वाई की तारीख/Date of Hearing : 23.02.2026
घोर्णा की तारीख/Date of Pronouncement : 04.05.2026
आदे श /O R D E R
PER S.R.RAGHUNATHA, AM:
These appeals filed by the assessee are directed against two final assessment orders dated 30.07.2024 and 03.10.2024 passed u/s.143(3) r.w.s.144C(13) r.w.s.144B of the Income Tax Act, 1961 (hereinafter the 'Act'). The relevant assessment years are 2020-21 & 2021-22.
:-2-: IT(TP)A Nos.63 & 102/Chny/2024 &
ITA No.2533/Chny/2024
2. At the outset, the Ld.AR submitted that the appeal in ITA
No.2533/CHNY/2024 is a duplicate appeal for assessment year 2020-21 and same may be dismissed. In light of the submission of Ld.AR, the appeal in ITA No.2533/CHNY/2024 is dismissed as infructuous.
3. Common issues are raised in IT(TP)A Nos.63 & 102/CHNY/2024. Hence, they were heard together and are being disposed off by this consolidated order. We shall first adjudicate the appeal in IT(TP)A No.63/CHNY/2024.
IT(TP)A No.63/CHNY/2024, (AY 2020-21)
4. Brief facts in relation to the above appeal are as follows: The assessee is a company incorporated in the year 2006, which is engaged in the business of freight forwarding services, logistics and distribution services. The assessee is wholly held subsidiary of CCH Robinson Investments Ltd., SARL, which is ultimately held by CH Robinson Worldwide Inc USA, (CHR USA). For the assessment year 2020-21, the assessee filed its return of income on 29.01.2021 declaring total income of Rs.6,74,75,520/-. The return was selected for scrutiny and notice u/s.143(2) of the Act was issued on 29.06.2021. Thereafter, notices u/s.142(1) of the Act was issued on various dates. During the course of assessment proceedings, it was noticed that assessee had entered into numerous international transactions with its Associated Enterprises (AE). The AO referred the matter to the Transfer Pricing Officer (TPO) to determine the Arms' Length Price of international transaction undertaken by the assessee with its AE during the previous year. The TPO passed an order u/s.92CA(3) of the Act on 27.07.2023 proposing total adjustment of Rs.40,16,10,009/-. The details of proposed adjustment by the TPI are as under:-
Upward adjustment on international Rs.6,14,87,286/-
transaction relating to Freight forwarding
income
Downward adjustment with regard to Rs.7,27,51,576/-
Corporate Overheard Charges
:-3-: IT(TP)A Nos.63 & 102/Chny/2024 &
ITA No.2533/Chny/2024
Interest on Trade Receivables Rs.26,73,71,147/-
Total adjustment Rs.40,16,10,009/-
5. Subsequent to the receipt of TPO's order, the AO passed draft assessment order u/s.144C(1) of the Act dated 22.09.2023 by incorporating the transfer pricing adjustment proposed by the TPO. Against the draft assessment order, assessee filed objections before the Dispute Resolution Panel (DRP) on 19.10.2023. The DRP vide its directions dated 18.06.2024, disposed off the objections of the assessee company. Pursuant to the DRP's order, TPO passed order giving effect. The AO after the receipt of DRP's direction and the order of the TPO giving effect to DRP's direction, passed the impugned final assessment order on 03.10.2024. Insofar as the TP adjustment is concerned, only with reference to TP adjustment relating to freight forwarding expenses, there is a reduction of TP adjustment from Rs.6,14,87,286/- to Rs.4,74,14,955/- while passing the final assessment order. The other TP adjustments proposed in the draft assessment order was confirmed by the DRP.
6. Aggrieved by the final assessment order dated 03.10.2024, assessee has filed the appeal, IT(TP)A No.63/Chny/2024 for the assessment year 2020-21. Originally, assessee has raised 15 grounds and 2 additional grounds vide petitions dated 29.05.2025 and 02.02.2026. Subsequently, assessee filed concise grounds which includes the additional grounds filed vide petition dated 29.05.2025. The Ld.AR submitted that the concise grounds may be adjudicated. Concise grounds filed for the assessment year 2020-21 read as follows.
Issue 1 and 2: General objections and objections to TPO's analysis of Freight Forwarding Segment
1. The Hon'ble DRP and the Ld. TPO/ Ld. AO have grossly erred, in law and in facts by incorrectly computing the margins of Freight Forwarding Segment by including and excluding comparables without appreciating the functional profile/business operations and satisfaction of appropriate filters applied by the TPO/Appellant.
:-4-: IT(TP)A Nos.63 & 102/Chny/2024 & ITA No.2533/Chny/2024
2. The Hon'ble DRP and the Ld. TPO/ Ld. AO have grossly erred in law by rejecting working capital adjusted margins for comparable companies in the Freight Forwarding Segment.
(Grounds of Appeal - 2 to 5) Issue 3: Corporate Overhead Charges
3. The Hon'ble DRP and the Ld. TPO/Ld. AO have grossly erred in disallowing payment of corporate overhead charges to C.H. Robinson Worldwide Inc, USA ('CHR USA'), in ignorance of the evidence of receipt of services, by rejecting the commercial expediency test, by incorrectly classifying activities as shareholder activities and by wrongly computing ALP as NIL in the absence of any comparative analysis using CUP method.
(Grounds of Appeal - 6 to 7) Issue 4: Objections against imputation of Notional interest on Trade receivables
4. The Hon'ble DRP and the Ld. TPO/Ld. AO have erred, in law and in facts, by treating the outstanding receivables of the Appellant from its AE as a separate international transaction under Section 92B of the Act in ignorance of the fact that TP documentation of Freight Forwarding segment includes working capital adjusted margins that subsumes delayed credit period.
5. Without prejudice to the above contentions, if interest needs to be charged on receivables under Section 92B of the Act, we wish to submit that such outstanding payables/advances from AEs should be netted off against outstanding receivables.
(Grounds of Appeal - 8 to 11 and Additional grounds of appeal) Issue 5: Disallowance of contribution to Employee's provident fund and Employee's state insurance corporation fund
6. The Ld. AO has grossly erred in retaining the disallowance of INR 1,36,35,580 in relation to employee's contribution made to provident fund & ESI fund under section 36(1)(va) of the Act without considering the fact that the said amount was deposited within the respective due dates as specified in the relevant Acts.
(Grounds of Appeal-12 to 13) Issue 6: Incorrect computation of tax liability
7. The Ld. AO adopted incorrect value of total income for the purpose of computing the tax liability, which is not in consonance with the value specified in the impugned final assessment order.
8. The Ld. AO has erroneously levied interests under section 234A and section 234B of the Act.
(Grounds of Appeal-14 to 15)
:-5-: IT(TP)A Nos.63 & 102/Chny/2024 &
ITA No.2533/Chny/2024
7. However, we notice that the Ld.AR has not raised any contentions with regard to issue No.5 & 6. Hence, the issue Nos.5 & 6 raised before the Tribunal are dismissed. We shall adjudicate the surviving issues as under.
Issue No.1 & 2 : General objections and objections to TPO's analysis of Freight Forwarding Segment (Ground Nos. 2 to 5 in the original grounds of appeal):
8. The brief fact of the issue is that the TPO has denied the working capital adjustments for TNMM analysis of freight charges paid/received by making a downward adjustment of Rs.6,14,87,286/- which was reduced to Rs.5,73,82,857/- by passing an order u/s.154 of the Act. Subsequently, the assessee filed an objection before the DRP-2, Bangalore against the adjustments made by the TPO. The DRP confirmed the working capital adjustment for TNMM analysis of freight charges paid/received by holding as under:
"3.5 With regards to the working capital adjustment for TNMM analysis of freight charges paid/received Having considered the submissions, we note that Rule 108 provides for making reasonably accurate adjustment to the uncontrolled comparable transaction to eliminate the material effects of differences on the price, cost of profits. The assessee has argued for working capital adjustment contending that there exist differences in the payable and receivable position between the assessee and the comparables. However, it was not demonstrated with any data or information as to the impact of such difference on the price, cost or profits, and as to whether such difference materially affect the price, cost or profits. The 'Accounts payables and Receivables shown in the balance sheet only reflects the position as at the end of the financial year, and as such it would not enable to measure the impact of working capital on the costs, price or profits. The working capital requirements and impact depends on various factors such as business cycle, the nature of business activity with its correlation on the general economic trends, the fund and capital position of the company, its marketing strategies, its market share etc. all of which cannot be captured in the year end Receivable or Payable position. Besides, the 'Payable' and 'Receivable' position stated in the Balance Sheet may not exactly reflect as to whether it arises from transaction relating to Revenue Account or Capital Account as there is no uniformity in the accounting or reporting requirements, and an intermixing is generally possible. The cost ascribable to the working capital would :-6-: IT(TP)A Nos.63 & 102/Chny/2024 & ITA No.2533/Chny/2024 be different to different enterprises depending on the cost of fund to the enterprise, the cost of money in the economy it operates etc. In view of these, a reasonable accurate adjustment is not possible, as the differences in working capital requirements itself is based on various assumptions. Besides, we also note that the assessee had failed to demonstrate such material differences so as to warrant an adjustment. In these circumstances, we are inclined to uphold assumptions. Besides, we also note that the assessee had failed to demonstrate such material the TPO's reasoning and reject the assessee's claim for working capital adjustment."
Accordingly, the AO by passing a final assessment order as per the directions of the DRP and reduced the downward adjustment related to freight forwarding segment to Rs.4,74,14,955/-.
9. Before us, the ld.AR submitted that the authorities have grossly erred in law and in facts by incorrectly computing the margin of freight forwarding segment by including and excluding certain comparables without appreciating the business operations and satisfaction of appropriate filters applied by the TPO against the assessee. Further, the ld. AR submitted that the TPO, AO and DRP have grossly erred in law by rejecting the working capital adjustment margin for comparable companies in freight forwarding segment. In support of the above arguments, the ld.AR submitted that the working capital adjustment has to be allowed to the assessee as the issue is directly covered by the assessee's own case in the decision of the Chennai Tribunal in ITA No.3444/Chny/2016 dated 23.02.2022. The said ruling has been followed and allowed the appeal of the assessee for the assessment year 2015-16 in IT(TP)A No.18/Chny/2020 dated 04.12.2024.
10. The relevant extract of the said decision is given below:
7. We have heard both the parties, perused material available on record and gone through orders of the authorities below. We find that the learned CIT(A) has recorded categorical finding that in light of Rule 10B(3) of the Income Tax Rules, 1962, that the assessee has demonstrated by presenting working capital position and also details of working capital days and proved that there is difference between working capital cycle of assessee with that of comparables. Therefore, suitable adjustment should be made to provide working capital for comparing operating :-7-: IT(TP)A Nos.63 & 102/Chny/2024 & ITA No.2533/Chny/2024 margin of the assessee with that of comparables selected for testing international transactions of the assessee. The learned CIT(A), while doing so, has relied upon the decision of the ITAT., Chennai in the case of M/s.Foxteq Services India Pvt.
Ltd. in ITA No.174/Mds/2016, where it was clearly held that working capital employed by the assessee and that of comparable companies needs to be taken into consideration and further, without making suitable adjustments there cannot be any transfer pricing adjustments to international transactions of the assessee. The relevant findings of the learned CIT(A) are as under:-
10. I have carefully' considered the facts in issue, order of the AO/TPO, submissions made by the Appellant and materiel on record, Alter taking into consideration detailed submissions made by the appellant, the following issues arise for consideration:
(i) Rule 108(3) of the Income-tax Rules provides that, in cases where any difference exists in a comparability analysis, the same needs to be eliminated by performing reasonably accurate adjustments to mitigate the effects of such differences.
(ii) On perusal of detailed submission relating to working capital adjustment, it is pertinent to note that working capital of the company have direct bearing in the profitability of the appellant and comparable companies.
(iii) The appellant demonstrated this by presenting the working capital position and also furnished the details of the working capital days. It can be observed that a wide gap exists between the working capital cycle of the appellant and the comparable companies chosen i.e. 16.29 days of the appellant vis-a-vis 58.44 days of working capital cycle of the comparables.
This difference would materially affect the operating margins of the appellant and comparable companies, thus warranting an economic adjustment.
(iv) The methodology of computation of the working capital adjustment was also presented by the appellant, which is prepared in line with the transfer pricing guidelines prescribed by the Organisation for Economic Cooperation and Development in Annexure to Chapter III and can be considered to be appropriate.
11. Accordingly, it would be appropriate that, while comparing the operating margins earned by the comparable companies Vis-à-vis the appellant, differences on account of working capital employed should be factored So far as the merits of the issue raised in the aforesaid ground is concerned, the view finds support in the Jurisdictional Tribunal decision in the case of Foxteq Services India Private Limited :-8-: IT(TP)A Nos.63 & 102/Chny/2024 & ITA No.2533/Chny/2024 (TA No. 174/Mds/2016) for AY. 201 112 order dated 1.9.2016 wherein it was held as under:
7 The assessee objected to the adjustment made by the Transfer Pricing Officer.
With regard to working capital adjustment, the asseessee claims that the difference in working capital between the assessee and the comparable companies -would materially affect the profit determined. Therefore, 'certain adjustment needs to be made to bring them on equal footing. The assessee also brought to the notice of the DRP that the working capital adjustment, which was to ensure the profit derived by the comparable companies, can be compared with the profit of the asessee. This Tribunal is of the considered opinion that the capital employed on the assessee, including working capital, is one of the relevant factors for the purpose of determining the arm's length price. Therefore, the capital employed by the assessee, including the working capital, and that of comparable companies needs to be taken into consideration. Without comparing working capital employed by the comparable companies and that of the assessee, this Tribunal is of the considered opinion that there cannot be any transfer pricing adjustment.
12. Hence, I am of the considered view that for the purposes of transfer pricing analysis any difference arising on account of working capital positions is required to be factored, so as to make the comparability analysis more equitable. Accordingly. the working capital adjustment sought for needs be granted to the appellant."
8. In this view of the matter and considering facts and circumstances of the case, we are of the considered view that there is no error in the reasons given by the learned CIT(A) to direct the TPO to provide working capital adjustments and thus, we are inclined to uphold findings of the learned CIT(A) and reject grounds taken by the revenue."
In view of the above arguments and following the judicial precedents of the assessee's own case, the ld.AR prayed for directing the TPO to give the working capital adjustment as claimed by the assessee.
11. Per contra, the ld.DR supported the orders of the authorities and prayed for confirming the same.
12. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities along with the paper book filed and judicial precedence relied on. On perusal of the TPO's order in respect of :-9-: IT(TP)A Nos.63 & 102/Chny/2024 & ITA No.2533/Chny/2024 the freight forwarding segment, we note that the TPO has rejected the working capital adjustment claimed by the assessee and made a separate independent search of comparables by rejecting the working capital adjustments in the freight forwarding segment. The same has been confirmed by the DRP in its directions as noted in Para 3.5 of the proceedings of the DRP dated 18.06.2024 (supra). On perusal of the decision of the Chennai Tribunal in assessee's own case in ITA No. 3444/Chny/2016 dated 23.02.2022 (supra) for the assessment year 2011-12, we find that in the similar set of facts and the Tribunal has already decided the issue in favour of the assessee by directing the TPO to provide working capital adjustment.
13. Therefore, in the present facts and circumstances of the case and by respectfully following the decision of the Tribunal, we are of the considered view that the authorities have erred in rejecting the working capital adjustments in respect of freight forwarding segment and hence, we direct the TPO to provide working capital adjustments by allowing the grounds of appeal filed by the assessee.
14. The next issue raised by the assessee is inclusion of two comparables to arrive at the arm's length of the international transactions (i) AP Logistics and (ii) Dimension Logistics. The TPO has excluded the above two companies from the comparables as these two companies fails the RPT filter in Prowess IQ-Database. In the objections filed before the DRP, the assessee claimed that these two companies satisfies the RPT filter and other filters and hence, eligible to be a comparable. However, the DRP declined to consider it as a comparable for the reason that the companies annual report does not have any schedule.
15. Aggrieved by the exclusion of these two comparable companies, the assessee is in appeal before us.
:-10-: IT(TP)A Nos.63 & 102/Chny/2024 & ITA No.2533/Chny/2024
16. The ld.AR for the assessee submitted that there were nil related period transactions for the financial year 2019-20 corresponding to assessment year 2020-21 for these two companies. It is further submitted that the RPT filter was applied by the TPO himself for the first time in his TP order. The ld.AR stated that the financials are silent in related period transactions. Hence, this has to be presumed that no RPT took place during the relevant year. In respect of AP Logistics the ld.AR submitted that in the paperbook at Page no. 7 of annual report in auditor report of RPT Para XIII, the declaration have been made wherever applicable. Similarly in respect of dimension logistics, the paperbook at page 27 of the annual report, the declaration have been made wherever applicable. Therefore, the ld.AR prayed that the above two companies has to be included as comparables.
17. Per contra, the ld.DR submitted that the RPT details are not available and hence, the TPO has rightly rejected these two companies and prayed for confirming the same.
18. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities along with the paper book filed and judicial precedence relied on by both the parties. The exclusion of a comparables merely on the ground that the details of related party transactions (RPT) are not expressly disclosed in the financial statements is not justified in law. As held by the Bangalore Bench of the Tribunal in EMC Software & Services India Pvt. Ltd. v. JCIT, (ITA No.3375/Bng/2018) a company cannot be rejected solely for want of specific RPT disclosure when it is otherwise functionally comparable and there is no material on record to indicate the existence of significant related party influence affecting its margins.
19. Similarly, the Ahmedabad Bench in DCIT v. Babite Consultants India Pvt. Ltd. [ITA 1018/Ahd/2011 dated 20.08.2015 for the A.Y. 2005-06] has held that the :-11-: IT(TP)A Nos.63 & 102/Chny/2024 & ITA No.2533/Chny/2024 application of the RPT filter cannot be carried out in a mechanical manner or on mere presumption, and that exclusion of comparables must be supported by cogent evidence demonstrating the existence and materiality of related party transactions. In the absence of such demonstrable material, non-disclosure per se cannot lead to an adverse inference so as to warrant exclusion. The RPT filter, being a tool to eliminate controlled transactions, must therefore be applied on the basis of verifiable data and not on conjecture or surmise.
20. In view of the above discussion and in the present facts and circumstances of the case we are of the considered opinion that these two companies (i) AP Logistics and (ii) Dimension Logistics are to be included as comparables. Therefore, we direct the TPO to include these two comparables by allowing the corresponding grounds of appeal of the assessee.
Issue No.3: Corporate Overhead Charges (Ground Nos.6 & 7 in original grounds of appeal)
21. The assessee company is part of CHR group. It is stated that assessee company has received services from CHR-USA. It is further stated that most important service that was provided to assessee company was access to software system called Navisphere (copy of service agreement dated 01.01.2017 is placed on record at from pages 1 to 21 of IGS paper-book). By virtue of access to this software, it is stated that entire freight business which was happening across the world has been conducted by the assessee company. In the TP study conducted by assessee company, the said support services (called corporate overhead charges) was benchmarked using TNMM method by aggregating the same with freight services. The TPO determined the ALP of corporate overhead charges as 'nil'. The TPO held that each transaction should be analyzed individually. Further, it is held by the TPO that there was no proof for retention of services. Accordingly, the ALP was determined 'nil', by applying CUP method consequent to the TPO :-12-: IT(TP)A Nos.63 & 102/Chny/2024 & ITA No.2533/Chny/2024 order TP adjustment of Rs.7,27,51,579/- was proposed. The relevant finding of the TPO reads as follows:-
"As per the provisions envisaged in Rule 10B and 10C, the most appropriate method has to be chosen keeping in mind the factors which have been prescribed in the rules. The assessee cannot choose a method which does not provide the most reliable measure of an arm's length price in relation to an international transaction. In this case 'Such Other Method' cannot actually prove that the services have been received and it certainly does not put a value to them. As the purpose of this audit is to determine the arm's length nature of the transaction, it has to start with the basics, in this case the receipt of services. As already discussed in the preceding paragraph the 'Such Other Method' does not most reliably measure the arm's length price of the international transaction for receipt of the services.
There are umpteen numbers of decisions of various benches of the ITAT regarding the transaction by transaction approach and, therefore, the payment for Management Support Services needs to be benchmarked separately using CUP method. Some of these decisions are as under:-
From the above, it is clear that each transaction should be analyzed individually and CUP method would be the Most Appropriate Method for determination of ALP of the service charges paid. Thus, 'Such Other Method' adopted by the assessee with respect to the transaction on Corporate Overhead Charges is rejected and CUP method is adopted as MAM.
It can be seen from the above extracted rule that the most appropriate method has to be chosen keeping in mind the factors which have been prescribed in the rules. The assessee cannot choose a method which does not provide the most reliable measure of an arm's length price in relation to an international transaction. In this case 'Such Other Method cannot actually prove that the services have been received and it certainly does not put a value to them, it only compares the margin of the tested party with other such comparables engaged in almost similar transactions. These comparables may not have made payments for the receipt of any such services. As the purpose of this audit is to determine the arm's length nature of the transaction, it has to start with the basics, in this case the receipt of services. As already discussed in the preceding paragraph the 'Such Other Method' does not most reliably measure the arm's length price of the international transaction for receipt of the services."
22. The DRP affirmed the decision of the TPO. The DRP held that a transaction by transaction analysis has to be done and the TPO was correct in taking CUP as most appropriate method and rejecting the aggregate TNMM method that was done :-13-: IT(TP)A Nos.63 & 102/Chny/2024 & ITA No.2533/Chny/2024 by the assessee company because IGS segment was a distinct business which was a class of its own. The relevant finding of the DRP confirming the TPO's order reads as follows:-
"4.2.1 The business support service charges paid by the assessee to its AE is a distinct and separate International transaction. The payment is made in the form of Business support services is a class of its own and requires separate benchmarking analysis. The TNMM method is not the MAM for benchmarking this transaction. As per rule 108(1)(e) the TNMM is applied In the cases where the net profit margin realised by the enterprise from an international transaction entered into with an Associated enterprise is computed in relation to costs incurred or sales effected or assets employed or to be employed by the enterprise or having regard to any other relevant base. The net profit margin realised by the enterprise or by an unrelated enterprise from a comparable uncontrolled transaction or a number of such transactions is computed having regard to the same base.
4.2.2 The TPO has rightly selected comparable uncontrolled price method (CUP) under rule 108(1)(a). Under CUP method the price charged or paid for services provided in a comparable uncontrolled transaction or a number of such transactions is identified. Such price is adjusted to account for difference if any between the international transaction and the comparable uncontrolled transaction which would materially affect the price in the open market. The adjusted price arrived at is taken to be an Arm's Length Price in respect of services provided in the International Transaction. The TPO has taken CUP method for benchmarking the transaction using the benefit test. The Most Appropriate Method for determination of ALP of this transaction of the assessee is concerned is an expense transaction and therefore, CUP would be the MAM.
4.2.3 Further, we note that as the assessee failed to substantiate receipt of services, and also failed to demonstrate the economic and commercial benefits on account of these payments, the question of commercial expediency does not arise and accordingly, we do not find infirmity in the TPO's action to determine the ALP at NIL, by way of hypothetical CUP; as this is not a case where services have been provided but the TPO determined the ALP at NIL. An independent enterprise would not make payment for services that have been neither received nor any economic or commercial benefit accrued to the enterprise. We note that the ALP determination has been made taking into consideration what an independent enterprise would do when it had not availed the services or when it had not availed any commercial or economic gain. We find support for such a view in the decisions of the Bangalore ITAT in the case Cranes Software (52 taxmann.com19); Mumbai ITAT in Deloitte Consulting (22 taxmann. Com :-14-: IT(TP)A Nos.63 & 102/Chny/2024 & ITA No.2533/Chny/2024
107) and of the Kerala High Court in the case of MIL Controls Limited. The observation in these cases are relevant for discussion here under:-
.............
.................
4.2.6 In view of the above discussion, the Panel finds that the TPO has rightly rejected the TNMM as Most Appropriate Method and selected Comparable Uncontrolled Price Method. Further, as the assessee failed to prove the rendition of alleged services to it by the AE, the tangible benefits that accrued to the assessee from the so-called services and in view of the Judicial pronouncements discussed above, we uphold the decision of the TPO to consider the ALP at NIL for the concerned International Transaction. Accordingly, this ground of objection is hereby rejected."
23. Aggrieved by the order of the DRP confirming TPO's order, assessee has raised this issue before the Tribunal. The Ld.AR submitted that it is clear from the order of the TPO, he has admitted some services has been rendered by the foreign entity to the assessee. It is also clear from the said order, some proof/evidence has been furnished for rendering of such services to the assessee company. The Ld.AR also placed specific reliance of the TPO's finding that assessee's company is having a lien structure and these services were indeed required. Therefore, it s contended that after admitting there was some services rendered and having given some proof, the TPO has erred in taking the ALP at 'nil' without doing any benchmarking and finding out other comparables. The Ld.AR has took us through the paper-book, TP compilation wherein assessee company had furnished some evidences with regard to retention and receipt of services such as agreement concerning, snapshot of Navisphere software received by the assessee, screenshot of how Navisphere was used to store details of freight shipment, sample invoices raised by CHR USA for services rendered to the assessee, various email communications, etc. The Ld.AR further submitted that ALP cannot be determined at 'nil' by simply stating that no evidence was furnished and it is necessary for the TPO to undertake the benchmarking analysis and identify the comparables. Having failed so, it was submitted that the issue may be restored to the files of the TPO for fresh TP analysis on entire corporate group services payments. In support of his :-15-: IT(TP)A Nos.63 & 102/Chny/2024 & ITA No.2533/Chny/2024 contention, the Ld.AR relied on the order of the Chennai Bench of the Tribunal in the case of M/s. Gates India Company Pvt. Ltd., vs. ITO in ITA No.2745/CHNY/2017 (order dated 06.04.2016). The Ld.AR also relied on various Tribunal orders, which has deleted the TP adjustment wherein the TPO had took ALP at 'nil' after applying the CUP method stating there is no evidence to prove service was rendered. Lastly, the Ld.AR submitted that the TPO does not have the jurisdiction to question the retention of services and his mandate is limited to finding out the Arms' Length Price (ALP). In support of his contention, the Ld.AR relied on the following orders of the Tribunal:-
i) DCIT vs. Gulbrandsen Chemicals (P) Ltd., [2022] 140 taxmann.com 422 (Ahmedabad Trib)
ii) L'Oreal India (P.) Ltd., vs. ACIT, [2021] 133 taxmann.com 487 (Mumbai Trib)
24. Therefore, it was prayed by the Ld.AR in light of TPO's finding that these support services were indeed required and some evidences was also furnished with regard to the services actually been rendered, the ALP cannot be determined at 'nil'. Hence, it was submitted that the Tribunal may remand the matter to substantiate the submissions with additional evidence.
25. The Ld.DR on the other hand submitted that assessee company has not furnished the basis of compensation / payment made by assessee company of Rs.7,27,51,576/- towards its foreign AE namely CHR USA. It was submitted by the Ld.DR from perusal of the services agreement, sub-article 2.3 had clearly specifies the manner in which the payments have to be made. It was submitted that the assessee in the instant case has not furnished the details, the basis on which the invoices are raised and what are the services are rendered by CHR USA to the assessee. In the absence of such evidence being furnished, it was submitted that the TPO and the DRP was justified in treating the Arms' Length Price to intragroup services at 'nil'.
:-16-: IT(TP)A Nos.63 & 102/Chny/2024 & ITA No.2533/Chny/2024
26. We have heard rival submissions and perused the material on record. On perusal of the TPO's order dated 27.07.2023 passed u/s.92CA of the Act, it is clear (refer para 6.3, 6.2.4 & 6.2.7) that some services seem to have been rendered. It is also clear some evidence also been furnished by assessee company for having received certain service from its AE. Due to assessee's lean structure, it is clear some support service was indeed required from its foreign AE. The TPO after having admitted these factual aspect has taken the ALP to intragroup services as 'nil' by applying CUP method without doing any benchmarking and finding out comparables. The Chennai Bench of the Tribunal in the case of Gates India Company Pvt. Ltd., (supra), has held that ALP cannot be determined at 'nil' by stating that no evidence was furnished. It was further held it is necessary for the TPO to undertake the benchmarking analysis and identify the comparables. The relevant finding of the Chennai Bench of the Tribunal in the case of Gates India Company Pvt. Ltd., (supra), reads as follows:-
3. Sh. B. Ramakrishnan, the Ld. representative for the assessee, submitted that the DRP made downward adjustment in respect of international transaction relating to management service fee holding that the arm's length price of the management service fee paid to Associated Enterprise to be NIL. According to the Ld. representative, when the services rendered by the Associated Enterprise were supported by invoices, the Transfer Pricing Officer and the Dispute Resolution Panel are not justified in determining the arm's length price to NIL. According to the Ld. representative, the assessee adopted Transaction Net Margin Method as most appropriate method. The Profit Level Indicator of the assessee is much higher than the comparable companies selected by the assessee. Therefore, according to the Ld. representative, the Dispute Resolution Panel is not justified in determining the arm's length price at NIL.
.............
..............
.............
7. We have considered the rival submissions on either side and perused the relevant material available on record. The assessee adopted Transaction Net Margin Method as most appropriate method. However, the Transfer Pricing Officer adopted CUP method as most appropriate method. While adopting CUP method as most appropriate method, the TPO as well as DRP have not taken any comparable companies for determination of arm's length price. Rule 10B(1) of Income-tax Rules, :-17-: IT(TP)A Nos.63 & 102/Chny/2024 & ITA No.2533/Chny/2024 1962 says that the method should be selected in a following manner. For the purpose of convenience, we are reproducing Rule 10B(1):-
...........
..........
8. From the above, it is obvious that for selecting a Comparable Uncontrolled Price method, the price charged or paid for property transferred or services provided in a comparable uncontrolled transaction, or a number of such transaction is to be identified. In this case, admittedly, no such companies were identified by the TPO or DRP. Therefore, this Tribunal is of the considered opinion that the matter needs to be reconsidered by the authorities below. Moreover, the additional ground also needs to be reconsidered by the authorities below. Accordingly, the orders of all the authorities below are set aside and the entire issue is remitted back to the file of the Assessing Officer. The Assessing Officer shall refer the matter once again to Transfer Pricing Officer. The Transfer Pricing Officer shall select the comparable companies and thereafter decide the most appropriate method and then find out whether any adjustment is required for the international transaction. After the Transfer Pricing Officer's order, the Assessing Officer shall follow the procedure provided in Section 144C of the Act."
27. From the service agreement dated 01.01.2017 from Article 2, it is clear the manner in which the payment has to be made by the assessee to CHR USA. The assessee in this instant case has not given the specific details how and in what manner the services were rendered and for which assessee had made payment of Rs.7,27,51,576/- to CHR USA. In the absence of these details, we deem it appropriate to restore the matter to the TPO. The assessee is directed to substantiate payment of Rs.7,27,51,579/- with all the evidences/material to the satisfaction of the TPO that assessee company was in receipt of support services from its foreign AE justifying the said payment. It is ordered accordingly.
28. In the result, the issue No.3 (Ground Nos.6 & 7 in original grounds of appeal) is allowed for statistical purposes.
Issue No.4: Objections against imputation of Notional interest on Trade receivables (Ground Nos.8 to 11 in original grounds of appeal and additional grounds of appeal) :
:-18-: IT(TP)A Nos.63 & 102/Chny/2024 & ITA No.2533/Chny/2024
29. The brief facts of the issue are that the TPO has made an adjustment by adding interest on trade receivables to the tune of Rs.26,73,71,147/- by calculating the details provided by the assessee with the prevailing interest rate of LIBOR+350 BPS (1.9% +3.5%). The TPO provided the credit period of 30 days and the interest has been calculated on the receivables of Rs.547,21,02,286/- as on 31.03.2020 which is outstanding beyond 30 days and arrived the interest on trade receivables at Rs.26,73,71,147/-. On filing an objection before the DRP by the assessee, the same has been confirmed by the DRP in its direction, though the assessee pleaded that no finance cost has been debited to P&L account and the assessee is a debt free company.
30. Before us, the ld.AR submitted that it is a trite law that once working capital adjustment is made, it has to be subsumed the effect of delay in outstanding receivables and therefore, even after the amendment vide Finance Act, 2012, trade receivables cannot be treated as a separate international transaction. Further, the ld.AR submitted that the company is a debt free, it does not pay any interest on outstanding payables also. In such a situation even interest on outstanding receivables also cannot be treated as international transaction. Further, the ld.AR drew our attention to Page no.102 of TP compilation, wherein the company is having only liability which pertains to provision for deferred rent and current liabilities includes Trade payables, statutory dues, employee leave encashment and gratuity. Further, in Page no. 111 of TP compilation, the ld. AR shown that the long term loans and advances has been shown as nil in the audited financials of the assessee. Therefore, the ld.AR argued that the company is debt free.
31. The ld.AR further submitted that the DRP has mainly relied on Tribunal's decision in Bechtel's in ITA No.3560/Del/2016, which has already been considered and rejected by the Chennai Benches in Temenos India Private Limited vs DCIT in IT(TP)A No.32/Chny/2024 by observing that in the case of 'Bechtel' itself for :-19-: IT(TP)A Nos.63 & 102/Chny/2024 & ITA No.2533/Chny/2024 assessment year 2010-11, the Tribunal has held that the interest on delayed receivables cannot be treated a separate international transaction as the assessee was a debt free company and no interest was paid even on delayed payables. On appeal, the same was confirmed by the Hon'ble Delhi High Court in ITA No.379/2016 dated 21.07.2016, which in turn was confirmed by the Hon'ble Supreme Court in CC No.4956/2017 dated 21.07.2017. In view of the above arguments, the ld.AR prayed for deleting the TP adjustments made on account of interest on trade receivables.
32. Per contra, ld.DR argued that the DRP has made a detailed observation relying on various judicial precedents and hence, prayed for confirming the addition.
33. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities along with the paper book filed and judicial precedence relied on by both the parties. On perusal of the audited financials of the assessee, the company is not having any borrowings, consequently, no interest has been debited to the profit and loss account by claiming any interest expenditure. Further, the company neither has paid any interest to the trade payables nor collected any interest on delayed collection of trade receivables as well from both AE and Non-AE receivables. On perusal of the decision of the Chennai Bench in the case of Temenos (supra) it is clearly stated that "once the company is debt free and no interest has been debited to the profit and loss account as an expenditure the separate addition of interest on trade receivables need not to be made". The relevant extract of the decision is given below:
"15. From the above order of the Delhi Bench of the Tribunal in the case of Bechtel India Pvt. Ltd., concerning AY 2013-14, we find that ITAT has taken note of the judgments of the Hon'ble Delhi High Court, Hon'ble Supreme Court concerning AY 2010-11 and also co-ordinate bench order of the Tribunal for assessment year 2012-13. After taking note of above judicial pronouncements, the :-20-: IT(TP)A Nos.63 & 102/Chny/2024 & ITA No.2533/Chny/2024 ITAT had deviated from its earlier order for AY 2012-13 and followed the judgment of Hon'ble Delhi High Court and Hon'ble Supreme Court concerning AY 2010-11. The Delhi Bench of the Tribunal in Bechtel India Pvt. Ltd., for the assessment year 2013-14 had categorically held that there need not be any transfer pricing adjustment for imputing interest cost for the outstanding trade receivables from AEs when the assessee in the said case is a debt free company. Therefore, the DRP's reliance on the order of Delhi Bench of the Tribunal in Bechtel India Pvt. Ltd., concerning assessment year 2012-13 (which according to us has not laid down a correct proposition of law) is legally not tenable. In light of the above, we delete the transfer pricing adjustment imputing interest Income on the outstanding trade receivables. In the result, the Ground No.2 (f) is allowed. Since we have deleted the TP adjustment, of Rs.3,14,15,287/-, Ground No.2 and its other sub- grounds are not adjudicated. It is ordered accordingly."
34. In the present facts and circumstances of the case and by respectfully following the decision of the Tribunal, we are of the considered view that the adjustment made by the TPO on account of interest on Trade receivables is not sustainable. Therefore, we direct the TPO to delete the adjustment made on account of interest on Trade receivables by allowing the corresponding grounds raised by the assessee.
35. In the result the appeal of the assessee is partly allowed for statistical purposes.
IT(TP)A No.102/Chny/2024, (A.Y.2021-22)
36. The Ld.AR submitted that the concise grounds may be adjudicated and concise grounds filed for the assessment year 2021-22 read as follows:
"Issue 1 and 2: General objections to transfer pricing adjustments and disallowing Corporate Overhead Charges
1. The Hon'ble DRP and the Ld. TPO/ Ld. AO have grossly erred in disallowing payment of corporate overhead charges to C.H. Robinson Worldwide Inc, USA (CHR USA'), in ignorance of the evidence of receipt of services, by rejecting the commercial expediency test, by incorrectly classifying activities as shareholder activities and by wrongly computing ALP as NIL in the absence of any comparative analysis using CUP method (Grounds of Appeal-2 to 4) :-21-: IT(TP)A Nos.63 & 102/Chny/2024 & ITA No.2533/Chny/2024 Issue 3: Objections against imputation of Notional interest on Trade receivables.
2. The Hon'ble DRP and the Ld. TPO/Ld. AO have erred, in law and in facts, hy treating the outstanding receivables of the Appellant from its AE as a separate international transaction under Section 92B of the Act in ignorance of the fact that TP documentation of Freight Forwarding segment includes working capital adjusted margins that subsumes delayed credit period.
3. Without prejudice to the above contentions, if interest needs to be charged on receivables under Section 92B of the Act, we wish to submit that such outstanding payables/advances from AEs should be netted off against outstanding receivables.
Issue 4: Incorrect computation of tax liability
4. The Ld. AO erred in law and facts, by initiating penalty proceedings under section 270A of the Act."
37. We have carefully considered the rival submissions and perused the material available on record. In respect of the disallowance of 'Corporate Overhead Charges', we find that the issue under consideration is identical to that decided by us, in IT(TP)A No.63/Chny/2024, for the Assessment Year 2020-21 (supra). It is not in dispute that the facts and circumstances of the present case are pari materia with those in the above decision. In the absence of any distinguishing feature having been brought on record by the Revenue, we respectfully follow the said decision and hold that the findings rendered in para No... 26 & 27 shall apply mutatis mutandis to the issue raised in the present appeal. Accordingly, this ground of appeal is restore the matter to the TPO in terms of the above decision.
38. In respect of the imputation of Notional Interest on Trade Receivables, we find that the issue under consideration is identical to that decided by us, in IT(TP)A No.63/Chny/2024, for the Assessment Year 2020-21 (supra). It is not in dispute that the facts and circumstances of the present case are pari materia with those in the above decision. In the absence of any distinguishing feature having been brought on record by the Revenue, we respectfully follow the said decision and hold that the findings rendered in para No... 33 & 34 shall apply mutatis mutandis to the issue raised in the present appeal. Accordingly, this ground of appeal allowed by directing :-22-: IT(TP)A Nos.63 & 102/Chny/2024 & ITA No.2533/Chny/2024 the TPO to delete the adjustment made on account of interest on Trade receivables in terms of the above decision.
39. In the result, the appeal filed by the assessee is partly allowed for statistical purposes.
Order pronounced in the court on 04th May, 2026 at Chennai.
Sd/- Sd/-
(जॉजज जॉजज के) (एस. आर. रघुनाथा)
(GEORGE GEORGE K) (S.R.RAGHUNATHA)
उपाध्यक्ष /VICE PRESIDENT लेखा सदस्य/ACCOUNTANT MEMBER
चेन्नई/Chennai,
ददनांक/Dated, the 04th May, 2026
JPV
आदे श की प्रनतललपप अग्रेपर्त/Copy to:
1. अपीलाथी/Appellant
2. प्रत्यथी/Respondent
3.आयकर आयुक्त/CIT- Chennai/Coimbatore/Madurai/Salem
4. पवभागीय प्रनतननधि/DR
5. गाडज फाईल/GF DEVADAS Digitally DEVADAS signed by GOPALANA GOPALANACHARY Date: 2026.05.11 CHARY 14:22:38 +05'30'