The assessee contended that interest on delayed receivables should not be treated as a separate international transaction, as the impact of receivables was already factored into the working capital adjustment.

The Revenue contended that delayed realization of receivables beyond the agreed credit period constituted a separate international transaction under section 92B and, therefore, interest for the excess credit period was required to be separately benchmarked

The Tribunal held that delayed receivables may constitute an international transaction under section 92B; however, mere inclusion of receivables within its ambit does not automatically warrant a TP adjustment. It also noted that delays need to be examined on a transaction-to-transaction basis.

The assessee further submitted that it was a debt-free company with no interest-bearing borrowings and had not incurred any interest cost in relation to the delayed receivables. Therefore, no notional interest should be imputed in the absence of any financing benefit provided to the AE.

The Revenue contended that the assessee’s debt-free status could not be considered, as no specific ground had been raised by the assessee challenging the TP adjustment on this basis. Accordingly, the plea regarding absence of interest cost should not be entertained at the appellate stage

The Tribunal observed that the assessee’s debt-free status was undisputed and the Revenue had not demonstrated any interest cost incurred by the assessee or any financing benefit provided to the AE. Hence, no notional interest adjustment was warranted merely due to delay in realization of receivables.