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7. The learned CIT(A) erred in considering notional rate of interest at average comparable rate instead of LIBOR rate.
8. The order passed by the Hon. CIT(A) is bad in law."

3. The fact in brief of the case is that return of income declaring income of Rs. 9,12,53,760/- was filed on 18th Nov, 2013. Subsequently, the case was selected under scrutiny by issuing of notice u/s. 143(2) of the act on 4th Sep, 2014. The assessee is engaged in the business of manufacturing and trading of glass mosaic during the year under consideration. The case of the assessee was referred to transfer pricing officer u/s. 92CA(1) of the act for the computation of arm's length price in relation to international transactions entered into by the assessee with associated enterprise. The assessee has entered into following international transactions with its associated enterprise as per the details given in form 3CEB.

g) Industry Selection: Considering the structure of Finance and Government sector, the loans issued to borrowers in the such Sector were rejected.

h) Credit Rating: The credit rating of the AEs was not available. The top rated loan instances i.e. with credit rating A,AA, AAA were not considered.

i) Base Rate and Currency: Since the invoices are denominated in US Dollar, the outstanding 'receivables have been considered the US Dollar denominated loan. The base rate is accordingly taken as 12 Months US Dollar LIBOR The above filters have been relaxed wherever required so as to have sufficient number of comparables. The adjustment for the annual fee and upfrontfee is made to the comparable instances to arrive at all in cost. The entire process and the comparable instances identified from the above process are enclosed vide Annexure-A to this showcause in a CD. Since the Indian outstanding receivables are considered as foreign currency loan, the assessee company has taken foreign exchange risk which is not factored in the above loan analysis. Looking at the fact that there had been severe fluctuations in the foreign exchange and the foreign exchange risk has been substantial, a 100 basis point increase on account of country and foreign exchange risk is found to be normal and udded lo the above margin. The ALP interest rate for the outstanding receivables pertaining to various AEs has been determined as under:

S No Name of the AE Base Rate Average Forex Risk ALP Interest Comparable Rate Rate 1 BISAZZA 12 Month 320 100 513.57 AUSTRALIA PTY. Libor-93.57 Bisazza India Pvt. Ltd. vs. DCIT LTD, Australia 2 BISAZZA CHINA 12 Month *' 110 100 303.57 LTD.. China Libor-93.57 3 BISAZZA MEXICO. 12 Month 425 100 618.57 S de RL de CV, Libor-93.57 Mexico 4 BISAZZA NORTH 12 Month • 168.75 100 362.32 AMERICA, INC., Libor-93.57 USA . 5 BISAZZA 12 Month 463.43 100 667.00 PHILIPPINES INC.. Libor-93.57 Philippines 6 BISAZZA S.P.A. 12 Month 252.5 100 446.07 (Unipersonale), Italy Libor-93.57 7 BTlSarl, Tunisia 12 Month 394 100 587.57 Libor-93.57 8 BISAZZA HONG 12 Month 260 100 453.57 KONG LTD. Hong Libor-93.57 Kong 9 BISAZZA JAPAN 12 Month 262.5 100 456.07 SHOWROOM, Japan Libor-93.57 Accordingly, you are hereby given a showcause why the upward adjustment should not made to the total income by applying above interest rates for the delayed realization so that the international transaction of outstanding receivables against sales made to the AEs is at ALP., You are also requested to furnish the working of such interest amount computed after applying above interest rates (including the excesss realization period for opening receivable as on 01/04/12)."
S No Name of the AE Base Rate Average Forex Risk ALP Interest Comparable Rate Rate 1 BISAZZA AUSTRALIA 1 1 Month 320 100 513.57 PTY. LTD, Australia Libor-93.57 2 BISAZZA CHIN A LTD., 12 Month Libor- 110 100 303.57 China 93.57 3 BISAZZA MEXICO, S de 12 Month Libor- 425 100 618.57 RLdeCV, Mexico 93.57 4 BISAZZA NORTH 1 2 Month 168.75 100 362.32 AMERICA, INC., USA Libor-93.57 5 BISAZZA PHILIPPINES 12 Month Libor- 463.43 100 667.00 INC., Philippines 93.57 6 BISAZZA S.P.A. 12 Month Libor- 252.5 100 446.07 (Unipersonale), Italy 93.57 7 BTI Sari, Tunisia 12 Month Libor- 394 100 587.57 93.57 8 BISAZZA HONG KONG 4- 12 Month 260 100 453.57 TD, Hong Kong Libor-93.57 9 B IS AZZA JAPAN 12 Month Libor- 262.5 100 456.07 SHOWROOM, Japan 93.57 10 BISAZZA BRASIL 12 Month Libor- 425 100 618.57 COMERCIO DE 93.57 MOSA1COS Consequently, the TPO has made an upward adjustment of Rs. 98,47,085/- to the total income of the assessee in view of the delay in realization of sale invoices from the associated enterprises as explained above.