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Name of the AE Interest Percentage ALP of the Interest Percentage Adjustment charged EKC 21,16,958 LIBOR+1 1,60,78,033 10.25% 1,39,61,075 International FZE, UAE EKC Industries 1,79,70,397 5% 3,68,39,314 10.25% 1,88,68,917 (Tianjin), China A.Y.2011-12 Total 2,00,87,355 5,29,17,347 ,328,29,992

10. The assessee filed its objections before the Hon'ble DRP and the' Hon'ble DRP vide their directions dated 03-12-2015 directed that the interest shall be charged @6 months LIBOR + 350 Basis point to EKC International FZE, UAE and 6 months LIBOR + 500 basis point to EKC Industries (Tianjin), China. The relevant portion of the order of the DRP is as under:

"In the aforesaid order Hon'ble Delhi High Court has held that interest rate applicable in case of loan transactions should be market determined interest rate applicable to the currency in which the loan has to be repaid. The currency in which the loan is to be repaid determines the rate of return on the money lent. In this case, the loan to both subsidiaries have been given in USD. Under these circumstances, we are of the opinion that USD rates for unsecured loan as applicable to the party whose credit rating is equivalent to that of the subsidiary should be applicable. The assessee has submitted that the I7-AT has held in its case for AY 2009-10 that charging of interest at the rate of LIBOR + 2% will be appropriate. The assessee has also submitted that its UAE subsidiary has taken loan from ICICI Bank were in facts three months LIBOR + .95% whereas Chinese subsidiary has taken loan in Chinese Yuan from Citi Bank at the rate of 5.95%. The AO has applied rate of 10.25% in respect of both the subsidies. So far as loan taken by the UAE subsidiary from ICICI Bank is concerned, it is seen that the loan is only USD 5 million. It is a secular loon with o charge on assets of the subsidiary and a corporate guarantee provided by the assessee. Besides, the UAE subsidiary has also to incur cost on insurance, upfront fee of 1% etc. Looking to the fact that the loan given by the assessee was a long term unsecured loan, no details have been provided by the assessee regarding the credit rating of the AEs and credit rating of the UAE subsidiary as determined by the AO is lower than that of the assessee, we are of the opinion that a of six months LIBOR + 350 basis points will be appropriate for UAE subsidiary and a rate of six months LIBOR + 500 basis points would be appropriate for the Chinese subsidiary. The AO/WO is directed to make that adjustments accordingly."
"Following the earlier order of this Tribunal in assessee's own case, we hold that the arm's length rote in respect of loon provided to the AE should be LIBOR +2%. Accordingly, the Assessing Officer is directed to recompute the arm's length rate in respect of the Joan transactions to each AE of the assessee by clubbing all the loan transactions of each AE and compare the interest charged by the assessee with arm's length rate at LIBOR + 2%. It appears that as regards the transactions of loon to its AF at China, the said transaction is at arm's length as the assessee has charged the interest at 796, therefore, only with respect to the transaction of loan to AE at Dubai are required to be re-computed for the purpose of TP adjustment."

13. Keeping in view of the facts and circumstances of the present case and on the basis of the material available on record, we, therefore, proceed to uphold the rate of interest @ LIBOR + 2% in respect of AE in Dubai and in respect of interest chargeable to AF in China, the Assessing Officer may follow the decision taken by him in the proceedings for Assessment Year A.Y.2011-12 2010-11 pursuant to the order of the Tribunal dated 08-09-2017. Thus, on this aspect assessee partly succeeds.