T vs. MOTOR CO. LTD.,CHENNAIVS.DCIT, CORP. CIRCLE-3(1), CHENNAI

ITTPA 52/CHNY/2026Status: DisposedITAT Chennai09 September 2026AY 2022-2319 pages
AI SummaryPartly Allowed

What were the facts?

The assessee, TVS Motor Co. Ltd., filed an appeal against the final assessment order for AY 2022-23, passed by the National Faceless Assessment Unit (AO) under section 143(3) r.w.s 144C(13) of the Income Tax Act, 1961. The AO had made upward transfer pricing (TP) adjustments based on the directions of the Dispute Resolution Panel (DRP). The TPO proposed adjustments for the sale of two and three-wheelers, corporate guarantee, and interest on outstanding receivables. The DRP upheld these adjustments but provided partial relief, reducing the total TP adjustment. The assessee's grounds of appeal challenge these adjustments, including the rejection of its TP study, segmental workings, allocation methodologies, treatment of export incentives, the application of the 3% tolerance band, corporate guarantee adjustments, and the imputation of interest on outstanding receivables.

What did the Tribunal hold?

The Tribunal, in relation to the issue of interest on outstanding receivables, noted that the Coordinate Bench in the case of Elgi Rubber Company Ltd. vs. DCIT had held that delayed realization of receivables is a consequence of the underlying business transaction. If no interest is charged from AEs or non-AEs, and the margins under TNMM are accepted as arm's length, a separate adjustment on account of outstanding receivables may not be warranted. The Tribunal also considered the impact of the COVID-19 pandemic on global trade cycles and realization patterns. However, the Tribunal found that the assessee's claim that no interest was charged on outstanding export receivables from non-AE customers needed verification. Therefore, the Tribunal remitted this issue back to the TPO to verify the claim based on documentary evidence. If substantiated, no interest would be charged. The appeal was allowed for statistical purposes.

What were the issues?

1. Whether the Tribunal erred in rejecting the assessee's detailed TP study and making upward TP adjustments of INR 11,44,80,619/- towards the sale of two and three-wheelers, INR 72,67,534/- towards corporate guarantee fees, and INR 2,28,42,451/- towards interest on outstanding receivables, contrary to the principles of consistency and segmental workings (Sections 92C, 92B, Rule 10B). - Assessee's contention: The DRP/TPO erred by rejecting the TP study, segmental workings, and allocation methodologies. The TPO also ignored the principle of consistency and the fact that the proposed adjustments fall within the 3% tolerance band under Section 92C(2). The corporate guarantee adjustment should be 0.50% as per earlier years' orders. The interest on outstanding receivables is not an international transaction and should not be charged as the assessee does not charge interest on similar third-party receivables, and RBI allows longer realization periods. - Revenue's contention: Not explicitly recorded, but implied by the AO's order and DRP's directions upholding the TP adjustments.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144C(13),Section 92C,Section 92B,Section 270A,Section 10B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘D’ BENCH: CHENNAI

Before: SHRI ABY T. VARKEY & MS. PADMAVATHY.S

For Respondent: Mr. K.Jayaganesh, CIT (virtual)

PER PADMAVATHY.S, A.M: This appeal by the assessee is against the final order of the assessment passed by National Faceless Assessment Unit (in short "AO") passed u/s. 143(3) r.w.s 144C(13) of the Income Tax Act, 1961 (in short "the Act") dated 31.01.2026 for Assessment Year (AY) 2022-23. The assessee raised the following grounds of appeal: “General grounds:

1.

1 The DRP/ TPO erred in facts and circumstances of the case and in

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 144C(13)

All 3,299 judgments and leading authorities on Section 144C(13) →

Recent GST High Court judgments

Search GST case law →