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13. The ld. CIT(A) at para 3 page 28 & 29 held as follows:

"3. I have carefully considered the submissions of the appellant-assessee in the light of the adjustment made by the Ld. AO / TPO. There is no dispute on facts that the interest charged by the appellant was@ BBSY + 2.5%. This according to the appellant is arm's length and no adjustment ought to be made. It is the contention of the appellant that the impugned loan transaction can be benchmarked against the credit facilities provided to the AE by SBI, Sydney, and that although the credit facilities were guaranteed by the appellant, the said guarantee did not have any bearing on the amount of facilities and rate of interest charged by the bank. The appellant has also enclosed a copy of the bank issued by the Bank in the matter. I find adequate merit in the contention of the appellant that as the said benchmarked transaction carried interest of LIBOR plus 1.25%, and as independent benchmark is available for the same borrower, no separate benchmarking was required in the case at hand. From the factual details emanating in the case, it is apparent that the assessee has charged interest @ BBSY plus 2.5% from its AE. As the AE in the case at hand is an Australian company, the appellant has also been able to compare the interest in assessee's case and AUD LIBOR plus 2%. From the table submitted, it is quite apparent that the interest rate charged by the assessee was higher than the benchmark, i.e. AUD LIBOR Plus 2%. This would certainly indicate, in my considered view that the price charged by the assessee was clearly at arm's length. It has also to be observed that various Benches of the Hon'ble ITAT have been holding that in case of international transactions involving interest on loan, LIBOR can be held to be a bench march for comparing the interest charged for uncontrolled transaction. The appellant has relied upon certain judgements which are applicable to its case, and wherein it has been held that LIBOR is to be taken as the benchmark for transactions of the type under discussion."

15. Thereafter in para 4 he held as follows:

"4. I have also examined the contentions of the appellant wherein it has been argued that the impugned ALP computed by the Ld. TPO is erroneous and hence cannot be used as a benchmark. I find factual merit in the contention of the appellant that the Ld. TPO in computing the ALP has considered the average cost of borrowed funds to the assessee/ domestic interest rates and added a spread of 750 basis points to the same. However, for the case at hand, there is no dispute that loan to the AE was made out of own funds of the appellant-company and therefore there would be no cost appellant while extending such a loan. The order of the Ld. TPO has remained silent about such factual contention of the appellant, and he has held the average cost of borrowed funds as the cost of making loan to the AE, which in my considered view is without factual and legal justification. Also, the contention of the appellant-company has strength that the loan was made in Australian Dollars i.e. foreign currency and hence domestic lending rates cannot be used as a base for calculating ALP, as has beer calculated by the Ld. TPO. Such a view is well supported by the decisions of the Hon'ble ITAT discussed supra, about what rates should be used for benchmarking a case. I has also been advanced by way of argument by the appellant that the computation on spread of 750 bp by the Ld. TPO is arbitrary and has no basis whatsoever, and the same has been arrived at by assigning credit rating of 'CC' to the AE, which has not been rated by any such agency. It has been contended that while doing so, the Ld.TPO relied upon a booklet 'Corporate Rating Criteria' issued by the Standard & Poor's in 2006. The booklet prescribes credit ratings based on various ratios like EBIT interest coverage, return on capital etc. and also credit ratings based on size of the corporate It is the contention of the appellant that the Income Tax Act, 1961 read with Transfer Pricing Rules prescribed for computation of arm's length price do not authorize the Ld. TPO to assign credit rating to corporate AEs, and that such action by the Ld. TPO/ AO was arbitrary and unjustified and without the sanction of law. Having examined the matter, it is to be said that the case law relied upon by the appellant, namely the judgment of ITAT(Delhi) in case of Kohinoor Foods Ltd. Vs. ACIT is applicable in the case at hand, and covers the matter. The matter is well covered by the general consensus among the Hon'ble ITAT Benches that international transactions involving cross-border country loans to AE can be benchmarked against LIBOR, as also supported by the RBI's circular that a spread ranging from 1% - 2% over LIBOR is reasonable for advancing loans. Therefore, in deciding the matter, it is held that a interest rate of LIBOR plus 2% can be held to be Arm's length rate of interest, and a for the case at hand, the interest charged by the assessee from its AE is higher than LIBOR plus 2%, the adjustment made by the Ld. TPO in the case is held to be unjustified and not sustainable. The ground of appeal stands allowed accordingly."

"4. Having examined the matter, it is to be said that the case law relied upon by the appellant, namely the judgment of ITAT(Delhi) in case of Kohinoor Foods Ltd. vs. ACIT applicable in the case at hand, and covers the matter. The matter is well covered by the general consensus among the Hon'ble ITAT Benches that international transactions involving cross- border country loans to AE can be bench marked against LIBOR, as also supported by the RBI's circular that a spread ranging from 1 % - 2% over LIBOR is reasonable (or advancing loans. Therefore, in deciding the matter, it is held that an interest rate of LIBOR plus 2% can ,be held to be Arm's length rate of interest, and as for the case at hand, the interest charged by the assessee from its AE is higher than LIBOR plus 2%, the adjustment made by the Ld. TPO in the case is held to be unjustified and not sustainable. The ground of appeal stands allowed accordingly."

36. Transfer pricing adjustment on loan advanced to AE: The TPO made a Transfer pricing adjustment of interest receivable amounting to Rs. 34,46,885/-. Similar issue was dealt by us for the earlier year as ground no. 2. We have held that international transaction involving cross-border loan to AE can be benchmarked against LIBOR. The RBI Circular states that the range from 1-2% for LIBOR is reasonable for advancing loans. Interest rate of LIBOR +2% can be held as an arm's length rate of interest. As the assessee has charged an interest higher than LIBOR +2%, the ld. CIT(A) has held that the same is at arm's length and deleted the adjustment. We find no infirmity in this order.