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2. Torrent Do Brazil Ltda. Short term finance 12,39,69,000 Interest charged at Rs. 

             Rua                                                           14,25,759/- @ Libor plus
                                                                           200 BPs
      3.     Torrent          Pharma   Short term finance   Various        Interest charged and
             Philippines               squared up during    amount         benchmarked     at   Rs.
                                       the year                            12,62,288/- @ Libor +
                                                                           100Bps

13.1. In response to SCN issued by TPO, assessee submitted that it has provided short term finance to its AEs and charged interest at the rate of LIBOR plus 100/200 basis points per annum whereas it has taken the foreign currency term loan at the rate of LIBOR plus 62.5 basis points. Accordingly, the assessee contended that the interest charged from AEs is comparatively on higher side from interest paid to the third party and thus the interest charged from the AE is at ALP. The Assessee further submitted that it is not in the business of lending money, therefore the margin charged by bank/financial institution cannot be taken as comparable. However, TPO disregarded the contention of the assessee by observing that there are certain clauses in the Loan agreement which should be considered while determining the ALP as detailed under:

i. "The loan has a commitment fee of 0.25% on the undrawn balance of the facilities i.e. the bank would be paid a fee even if the loan has not been availed.
ii. The interest charged is Libor plus 62.50 bps per annum (Libor plus 0.625%) ITA.Nos.1285/Ahd/2017 & 7 others A.Y.2009-10 iii. Agreement fees @0.5% to be paid immediately on signing the documents.

13.3. However the upward adjustment on account loan given to Torrent Pharma Philippines for Rs. 8,13,341/- has been reduced to Rs. 5,29,292/- vide order dated 22-03-2013 passed under section 154 of the Act.

14. The aggrieved assessee preferred an appeal to Ld. CIT (A) who confirmed the order of the AO/TPO by observing as under:

The appellant had given inter-corporate loan to its associate enterprise in foreign countries and had charged interest at the rate of LIBOR + 100 BP from its associate enterprises. It is stated that the loan advanced to the associate enterprise which is mainly subsidiaries is for advancing appellant's own business interest and it supports the business of the appellant in creating market. Il is further stated that the appellant has not incurred any loss or shifted any profit by advancing1 loan. It has been getting loan at the rate of LIBOR + 62.5 basis and is charging interest at LIBOR + 100 basis. Thus, it has not incurred any loss or transferred any profit. It is also argued that on account of conversion rate having been changed from the date of advancing loan and as on the close of the year it has earned foreign exchange gain on substantial basis. Therefore, there is no loss of revenue and hence the adjustment made is not justified.