SATYAM VENTURE ENGINEERING SERVICES PVT LTD,HYDERABAD vs. ACIT, CENTRAL CIRCLE-3(2), HYDERABAD

ITTPA 11/HYD/2026Status: DisposedITAT Hyderabad23 September 2026AY 2013-1414 pages
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What were the facts?

The assessee, M/s. Satyam Venture Engineering Services Private Limited, filed appeals against the orders of the CIT(A) for Assessment Years 2011-12 to 2014-15. The core issue revolves around transfer pricing adjustments for trade receivables. In the first round, the Tribunal restored the issues to the AO/TPO. In the second round, the TPO made an adjustment of Rs. 53,06,005/- for notional interest on outstanding trade receivables. The CIT(A) upheld the benchmarking but directed the adoption of LIBOR plus 200 basis points, partly allowing the assessee's appeal. The assessee is now before the Tribunal challenging this adjustment. The assessee's primary contention is that as a debt-free company, no notional interest adjustment is warranted.

What did the Tribunal hold?

The Tribunal held that where an assessee is completely debt-free and does not incur any interest cost on borrowed funds, no separate transfer pricing adjustment towards notional interest on outstanding trade receivables is warranted, following the decision in Kore AI Software India Pvt. Ltd. Vs. ITO, which in turn relied on decisions of the Chennai and Delhi Benches, ultimately approved by the Hon'ble Delhi High Court and affirmed by the Hon'ble Supreme Court. However, the Tribunal noted that the claim of being debt-free requires factual verification. Therefore, the issue was set aside to the Assessing Officer for verification. If found to be debt-free, the AO is directed to delete the transfer pricing adjustment of Rs. 1,46,83,001/-. Other grounds were rendered academic. The appeal was allowed for statistical purposes.

What were the issues?

1. Whether a transfer pricing adjustment for trade receivables is applicable to transactions emanating from services rendered in the regular course of business, which are revenue in nature, and not to 'capital financing' transactions (Section 92B, Section 92C, Section 92CA of the Income-tax Act, 1961)? 2. Whether a transfer pricing adjustment for trade receivables is applicable when the company did not charge interest from non-associated enterprises on similar receivables (Section 92B, Section 92C, Section 92CA)? 3. Whether the CIT(A) erred in directing the TPO to adopt LIBOR plus 200 basis points for transfer pricing adjustment on trade receivables (Section 92B, Section 92C, Section 92CA)? 4. Whether a transfer pricing adjustment for trade receivables is applicable to a debt-free company (Section 92B, Section 92C, Section 92CA)? Assessee's contentions: The transfer pricing adjustment for trade receivables is not applicable as the transactions are revenue in nature, not capital financing. No adjustment is warranted for a debt-free company as there is no actual financing cost incurred. Relied on Kore AI Software India Pvt. Ltd. Vs. ITO. Revenue's contentions: Outstanding trade receivables from AEs constitute a separate international transaction requiring independent benchmarking. Non-realization results in opportunity cost, and being debt-free does not eliminate this economic cost. Relied on lower authorities' orders.

Which sections of the Income-tax Act were involved?

Section 92B,Section 92C,Section 92CA,Section 40(a)(ia),Section 143(3),Section 144C(5),Section 254

AI-generated summary — verify with the full judgment below

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

Before: Shri Ravish SoodShri Madhusudan Sawdia

Hearing: 09/09/2026

Per Bench:

These appeals are filed by M/s. Satyam Venture Engineering Services Private Limited (“the assessee”), feeling aggrieved by the separate orders passed by the Learned Commissioner of Income Tax (Appeals)-11, Hyderabad (“Ld. CIT(A)”) dated 17.11.2025 and 18.11.2025 for the A.Ys. 2011- 12 to 2014-15. Since identical issues are raised by the assessee in all these 4 appeals, for the sake of convenience, these were heard together and are being disposed

The order continues below.

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