No Notional Interest to be assumed by TPO on Deferred Receivables to Debt-Free Company: Delhi HC

The Delhi High Court ruled that the Transfer Pricing Officer (TPO) cannot assume notional interest on deferred receivables for a company that is debt-free. The case centered on whether a debt-free company should be subjected to notional interest adjustments for deferred receivables. The court's ruling underscores that interest assumptions should align with the company’s actual financial status and market conditions. This decision is significant for transfer pricing assessments, as it prevents the imposition of unrealistic financial adjustments on companies based on hypothetical debt scenarios, ensuring that transfer pricing practices are grounded in actual financial realities.