diff --git a/erpnext/accounts/doctype/sales_invoice/test_sales_invoice.py b/erpnext/accounts/doctype/sales_invoice/test_sales_invoice.py
index 9b74092df35a..d6478328ca4a 100644
--- a/erpnext/accounts/doctype/sales_invoice/test_sales_invoice.py
+++ b/erpnext/accounts/doctype/sales_invoice/test_sales_invoice.py
@@ -1940,11 +1940,7 @@ def test_inter_company_transaction(self):
 		self.assertEqual(target_doc.company, "_Test Company 1")
 		self.assertEqual(target_doc.supplier, "_Test Internal Supplier")
 
-	def test_sle_if_target_warehouse_exists_accidentally(self):
-		"""
-			Check if inward entry exists if Target Warehouse accidentally exists
-			but Customer is not an internal customer.
-		"""
+	def test_sle_for_target_warehouse(self):
 		se = make_stock_entry(
 			item_code="138-CMS Shoe",
 			target="Finished Goods - _TC",
@@ -1965,9 +1961,9 @@ def test_sle_if_target_warehouse_exists_accidentally(self):
 		sles = frappe.get_all("Stock Ledger Entry", filters={"voucher_no": si.name},
 			fields=["name", "actual_qty"])
 
-		# check if only one SLE for outward entry is created
-		self.assertEqual(len(sles), 1)
-		self.assertEqual(sles[0].actual_qty, -1)
+		# check if both SLEs are created
+		self.assertEqual(len(sles), 2)
+		self.assertEqual(sum(d.actual_qty for d in sles), 0.0)
 
 		# tear down
 		si.cancel()
diff --git a/erpnext/controllers/selling_controller.py b/erpnext/controllers/selling_controller.py
index 0158a1120f99..e779e4d6c169 100644
--- a/erpnext/controllers/selling_controller.py
+++ b/erpnext/controllers/selling_controller.py
@@ -424,7 +424,7 @@ def update_stock_ledger(self):
 					or (cint(self.is_return) and self.docstatus==2)):
 						sl_entries.append(self.get_sle_for_source_warehouse(d))
 
-				if d.target_warehouse and self.get("is_internal_customer"):
+				if d.target_warehouse:
 					sl_entries.append(self.get_sle_for_target_warehouse(d))
 
 				if d.warehouse and ((not cint(self.is_return) and self.docstatus==2)
@@ -559,6 +559,12 @@ def validate_target_warehouse(self):
 				frappe.throw(_("Row {0}: Delivery Warehouse ({1}) and Customer Warehouse ({2}) can not be same")
 					.format(d.idx, warehouse, warehouse))
 
+		if not self.get("is_internal_customer") and any(d.get("target_warehouse") for d in items):
+			msg = _("Target Warehouse set for some items but the customer is not an internal customer.")
+			msg += " " + _("This {} will be treated as material transfer.").format(_(self.doctype))
+			frappe.msgprint(msg, title="Internal Transfer")
+
+
 	def validate_items(self):
 		# validate items to see if they have is_sales_item enabled
 		from erpnext.controllers.buying_controller import validate_item_type
diff --git a/erpnext/stock/doctype/delivery_note/delivery_note.py b/erpnext/stock/doctype/delivery_note/delivery_note.py
index 5542cd00d4cb..f75b52cec8eb 100644
--- a/erpnext/stock/doctype/delivery_note/delivery_note.py
+++ b/erpnext/stock/doctype/delivery_note/delivery_note.py
@@ -185,7 +185,6 @@ def validate_warehouse(self):
 			if not d['warehouse'] and frappe.db.get_value("Item", d['item_code'], "is_stock_item") == 1:
 				frappe.throw(_("Warehouse required for stock Item {0}").format(d["item_code"]))
 
-
 	def update_current_stock(self):
 		if self.get("_action") and self._action != "update_after_submit":
 			for d in self.get('items'):
diff --git a/erpnext/stock/doctype/delivery_note_item/delivery_note_item.json b/erpnext/stock/doctype/delivery_note_item/delivery_note_item.json
index b05090a237ef..a96c29925e5b 100644
--- a/erpnext/stock/doctype/delivery_note_item/delivery_note_item.json
+++ b/erpnext/stock/doctype/delivery_note_item/delivery_note_item.json
@@ -468,7 +468,7 @@
    "width": "100px"
   },
   {
-   "depends_on": "eval:parent.is_internal_customer",
+   "depends_on": "eval:parent.is_internal_customer || doc.target_warehouse",
    "fieldname": "target_warehouse",
    "fieldtype": "Link",
    "hidden": 1,
@@ -759,7 +759,7 @@
  "index_web_pages_for_search": 1,
  "istable": 1,
  "links": [],
- "modified": "2021-02-23 01:04:08.588104",
+ "modified": "2021-10-05 12:12:44.018872",
  "modified_by": "Administrator",
  "module": "Stock",
  "name": "Delivery Note Item",
@@ -767,4 +767,4 @@
  "permissions": [],
  "sort_field": "modified",
  "sort_order": "DESC"
-}
\ No newline at end of file
+}