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7. The ld. AR, on the other hand, submitted that the assessee has already submitted that TP Memorandum before the TPO and it had bench marked the interest rate based on LIBOR/SIBOR. He submitted that ECB and FRD are for a period of 5 years and above. Ld. AR brought to our notice the TP Memorandum (refer pages 212 to 228). Further, ld. AR submitted that as per the RBI guidelines, loan with average maturity period of 3 years and upto 5 years cost ceiling over 6 months LIBOR is 300 basis points. For the average maturity period of loan more than 5 years, the cost ceiling over 6 months LIBOR is 500 basis points. He submitted that in the given case, the assessee has borrowed the loan from its AEs for a period of 5 years and above, the payment of interest to its AEs is within the RBI guidelines. He further submitted that the banks to lend the money, will consider the terms and conditions of the loan, such as, tenure, seniority, security, call/put option, credit quality of the borrower, market in which the loan is extended etc., which are crucial factors in determination of the interest rate. The pricing/fixing of the interest rate by the banks are depending on the security risk and tenure of the loan. For bench marking with the given case, it has to be determined based on the level playing field adopted by the banks. Accordingly, spread of 500 Devgen Seeds & Crop Technology P. Ltd.

TP adjustments, as we find that the mostly used and recognised benchmark rate for international loan is LIBOR based. Hence, the DRP rightly directed the assessing officer to adopt the LIBOR rates. We confirm the directions of the DRP."

9.2 Aurobindo Pharma Ltd. Vs. ACIT, [2014] 42 Taxmann.com 556 (Hyd. In this case, the coordinate bench has held as under:

4.3 We have considered the issue and examined the facts. With reference to principle that LIBOR + specific percentage points is to be considered as ALP, there is no dispute as this issue was decided by various coordinate benches of Tribunal in various cases.

4.7 Similar view has been taken in the case of Tata Auto comp Systems Limited vs. ACIT, ITAT Mumbai, ITA NO. 7354/MUM/11(A. Y. 2007-08).

4.8 On the legal principles there is no dispute that LIBOR specific percentage points has to be considered as ALP. There is also no basis, as rightly observed by the DRP, to adopt corporate bonds rate at 17.26%. Therefore, in principle we agree with Assessee's contentions that libor + percentage points is to be accepted. However, it is seen from the details furnished at page 91 of paper book, few of loans provided in AY 2003-04 and 2004-05 in the case of Arubindo and Arubindo Farmo industria Farmaceutica Ldta and loans obtained from Axis bank and Federal Bank where the rate of interest paid was LIBOR +2.1% and LIBOR +3.25%. On these loans Assessee seems to have advanced at LIBOR +3% to Aurbindo whereas rate of interest received in Aurobindo Farmo industria Farmaceutica LTDA is 13.06%. Therefore, to the extent of advances which were given at a rate lesser than the rate at which those are obtained, the AO is directed to examine and if so, the rate of interest paid should be considered as ALP in order to determine the interest received. With these directions, this ground considered partly allowed.

9.3 In the case of Dr. Reddy's Laboratories Ltd. Vs. Addl. CIT, [2014] 48 Taxmann.com 374 (Hyd.), the coordinate bench has held as under:

"11. We have considered the rival contentions. Since the assessee has accepted 7 per cent. in the earlier years. The Tribunal felt that 7 per cent is reasonable and accordingly LIBOR linked interest was not considered. The issue in Four Soft Ltd. (supra) relied upon by the assessee is not about bank interest rate or fixed deposit interest rate. The issue contested was rate of LIBOR, the actual LIBOR rate as per the assessee was 4-l2 per cent whereas the Dispute Resolution Panel has taken LIBOR at 5.7 per cent. The Tribunal has directed the Assessing Officer to examine the correct rate of LIBOR and adopt LIBOR + rate in that case. There are other judgments also where 6 per cent. interest received was considered as LIBOR + 157 base points, so, 7 per cent interest rate approved would be about LIBOR + 257 base points. The co-ordinate Benches are approving on different factual situation, LIBOR + I per cent to 3 per cent and considering that, we also feel that 7 per cent rate is reasonable which is equivalent to LIBOR + 2 per cent. Be that as it may, since the assessee has accepted 7 per cent in the earlier year and that is the basis for directing to adopt 7 per cent by the Tribunal, we do not see any reason to modify the directions of the Tribunal in this regard. Accordingly, this contention of the assessee is rejected."