Section 92CE 90-Day Rule Not Applicable to AE Receivables

Case Details: Deputy Commissioner of Income-tax vs. Kantar GDC India (P.) Ltd. - [2026] 185 taxmann.com 876 (Hyderabad-Trib.)

Judiciary and Counsel Details

Ravish Sood, Judicial Member & Madhusudan Sawdia, Accountant Member
Ms Ananya Kapoor, Adv. for the Appellant.
Dr Narendra Kumar Naik, CIT-DR for the Respondent.

Facts of the Case

The assessee company was engaged in providing market research and data processing services. During the transfer pricing assessment, the TPO adjusted interest on delayed receivables from Associated Enterprises (AEs). For this purpose, the TPO allowed a 60-day credit period and applied SBI short-term deposit rates to compute the interest adjustment.

On appeal, the CIT(A) directed the AO/TPO to benchmark the interest using LIBOR plus 200 basis points instead of SBI deposit rates. The CIT(A) also allowed a credit period of 120 days while computing interest on outstanding receivables from AEs.

Aggrieved by the relief granted by the CIT(A), the Revenue preferred an appeal before the Tribunal. During the course of the hearing, the assessee submitted an alternative plea that, if the 120-day credit period was not accepted, a 90-day period should at least be allowed, drawing support from section 92CE read with Rule 10CB, which deals with secondary adjustments.

ITAT Held

The Tribunal upheld the application of LIBOR plus 200 basis points for benchmarking delayed receivables. However, it was observed that the determination of a reasonable credit period depends on the facts of each case and cannot be uniformly fixed at either 90 days or 120 days merely based on earlier decisions or statutory provisions operating in a different context.

The Tribunal further noted that, in earlier assessment years, the assessee had disputed only the rate of interest adopted by the TPO and had never challenged the credit period allowed by the department. According to the Tribunal, this indicated that the assessee had accepted the credit period adopted in those years. Accordingly, the AO/TPO was directed to follow the same credit period as accepted in AY 2013-14, rather than granting 120 days as a matter of course.

On the assessee’s reliance upon section 92CE read with Rule 10CB, the Tribunal clarified that those provisions apply specifically to secondary adjustments and repatriation of excess money held by AEs. Therefore, the 90-day timeline prescribed therein could not be imported into the normal transfer pricing provisions for determining the credit period in cases involving delayed receivables.

List of Cases Reviewed

Kantar GDC India (P.) Ltd. v. Dy. CIT [2024] 164 taxmann.com 25 (Hyderabad – Trib.) (Para14) Followed

List of Cases Referred to

Kantar GDC India (P.) Ltd. v. Dy. CIT [2024] 164 taxmann.com 25 (Hyderabad – Trib.) (para 7)
DGS Technical Services (P.) Ltd. v. Dy. CIT [2025] 180 taxmann.com 266 (Hyderabad – Trib.) (para 8)
TNS India (P.) Ltd. v. Asstt. CIT, Circle-2 (3), Hyderabad [2017] 77 taxmann.com 356/162 ITD 556 (Hyderabad – Trib.) (para 9)
TNS India (P.) Ltd. v. Dy. CIT, Circle-2 (3), Hyderabad [2015] 57 taxmann.com 165/40 ITR(T) 125 (Hyderabad – Trib.) (para 9)
TNS India (P.) Ltd. v. Dy. CIT, Circle- 2 (3), Hyderabad [2015] 56 taxmann.com 268/69 SOT 22 (Hyderabad – Trib.) (para 9)
TNS India (P.) Ltd. v. Asstt. CIT [2023] 156 taxmann.com 1002 (Hyderabad – Trib.) (para 9)
OSI Systems (P.) Ltd. v. Dy. CIT [2021] 126 taxmann.com 233 (Hyderabad – Trib.) (para 10)
Value Labs Technologies v. ITO [IT Appeal No. 1919 (Hyd) of 2017, dated 5-4-2019] (para 15).