M/s. Satyam Venture Engineering Services Private Limited vs. Asstt. Commissioner of Income Tax

Parties Involved

Facts Summary

The assessee, M/s. Satyam Venture Engineering Services Private Limited, is a company engaged in the business of providing IT-enabled services and BPO services. The assessee filed its return of income for Assessment Year 2011-12 on 25.11.2011, declaring total income of Rs. 75,71,189/-. The Assessing Officer passed the assessment order under section 143(3) read with section 144C(5) of the Income-tax Act, 1961, dated 31.12.2015, making, inter alia, an addition of Rs. 13,00,56,397/- under section 40(a)(ia) of the Act and determining the total income of the assessee at Rs. 28,42,01,891/-. Aggrieved by the assessment order, the assessee had preferred an appeal before the Tribunal challenging, inter alia, the addition made under section 40(a)(ia) of the Act. The Revenue had also preferred an appeal, inter alia, on the ground that no transfer pricing adjustment had been made on account of interest on outstanding receivables from the Associated Enterprises. In the first round of proceedings, the Tribunal restored both the issues to the file of the Assessing Officer/Transfer Pricing Officer for fresh adjudication. In the second round of proceedings, the assessee filed revised computation of income declaring total income of Rs.15,41,65,494/-. Further, the TPO determined a transfer pricing adjustment of Rs. 53,06,005/- towards notional interest on outstanding trade receivables by adopting the short-term deposit rate of State Bank of India. Pursuant thereto, the Assessing Officer passed t…

Legal Issues

• 1. Whether a separate transfer pricing adjustment towards notional interest on outstanding trade receivables is warranted in the case of the assessee, which claims to be a debt-free company.
• 2. Whether the assessee was completely debt-free during the relevant previous year.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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