ENCORA SOFTWARE INDIA PRIVATE LIMITED,HYDERABAD vs. DCIT, CIRCLE -8(1), HYDERABAD

ITA 558/HYD/2026Status: DisposedITAT Hyderabad16 September 2026AY 2022-2314 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that in the case of a debt-free company, no separate transfer pricing adjustment for notional interest on outstanding trade receivables is warranted. However, the assessee's claim of being debt-free requires factual verification.

What were the facts?

The assessee, a software development company, made international transactions with its associated enterprises. The Transfer Pricing Officer proposed adjustments for software development services and interest on trade receivables. The DRP deleted the adjustment for software development services but upheld the interest adjustment.

What were the issues?

Whether a transfer pricing adjustment for notional interest on outstanding trade receivables is justified for a debt-free company. The need for factual verification of the company's debt-free status.

Which sections of the Income-tax Act were involved?

Section 92CA,Section 143(3),Section 144C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Hyderabad ‘ B ‘ Bench, Hyderabad

Before: Shri Vijay Pal Rao, Vice-Shri Madhusudan Sawdia

Hearing: 02/09/2026

Per Madhusudan Sawdia, A.M.:

This appeal is filed by M/s. Encora Software India Private Limited (“the assessee), feeling aggrieved by the assessment order passed by the Assessing Officer under section 143(3) r.w.s. 144C(13) r.w.s. 144B of the Income Tax Act, 1961 (“the Act”) for A.Y. 2022-23, dated 24.12.2025 as per the directions of the Learned Dispute Resolution Panel-1 Bengaluru (“Ld. DRP”) dated 30.11.2025. 2. The assessee has raised the following grounds of appeal:

3.

The brief facts of the case are that the assessee is a priv

The order continues below.

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