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6. The assessee, in its Transfer Pricing Study Report (TP report), had mentioned that the Comparable uncontrolled Price(CUP) Method is the most appropriate method (MAM), and the assessee's foreign currency loan can be compared with any foreigncurrency loan given to an Indian company. It had stated that for foreign currency loans, the foreign companies may be charged by their Indian related party on the basis of the interest rate prevailing in the international market. It had further stated that, generally the rate of interest charged is linked to LIBOR which is the rate at which banks lend and borrow from each other.Monthly data for LIBOR for financial year 2009-10 had been utilized by the assessee to arrive at an average l2- month LIBOR (1.28%).Accordingly, the assessee had concluded that the pricing ofits international loan to its subsidiary (average7.59% p.a.) isat an arm's length. In an earlier assessment year, (i.e. AY 2008-09), the average LIBOR, as computed in itsTP Study Report for that year was 5.89%. The assessee's TP Report for that year mentionedthat 'we can assume that the Indian entity granting loan to its subsidiary abroad may do so out of its own accruals or out of the borrowed funds. Here, M.K. Shah Exports Limited has a short term foreign currency packing credit @ 4.5%. It further stated that the packing credit inforeign currency is mutually agreed upon between the banker and the exporter and the spreadgenerally consists of LIBOR plus a minimum of 1%. This is generally for a short period. In the case of the assessee, the TP Report further stated, that the foreign currency packing credit loan can betaken as an internal comparable for determining rate to be charged by the parent companyto itsforeign subsidiary. On the basis of this analysis, the assessee's TP Report for that yearconcluded that the loan had been priced at an arm's length.

It was submitted that in the hands of the assessee company the entire loan to its subsidiary was a trade investment in form of foreign currency loan. This financing helped the company in a big way to achieve a robust export turnover of Rs.52,13,15,075 (only to Zao Classic) and to earn a significant margin.Therefore, the amount advanced was not merely to earn interest but to rule substantial marketshare in Russia.Foreign Currency Loans are given by Banks globally bearing LIBOR based Rate.The average of the London Inter Bank Offer Rate (LIBOR) based Rate for the period from1.4.2009 to 31.3.2010 was 1.28483%. It had been compared by taking average monthly ratefor the period from 1.04.2009 to 31.03.2010. The data sourced from the site of LIBOR( average of 12 Month`s LIBOR for the financial year 2009-10) are as follows:

Rev enu e -IT A No s. 1 274 & 12 75 / Kol /201 6,andA s se s se e- 5 06 & 507 /Ko l /2 016 As s e s s men t Yea r s: 2 009 -10 & 20 10- 11 of its own fund and the entire loan to its subsidiary was in the form of trade investment which enabled the assessee to achieve robust export turnover and a substantial market share in Russia. The AO also did not use comparative data with reference to the year in which the loan was taken. With respect to the comparable rates of interest for loan to subsidiary in foreign currency, it is judicially accepted that LIBOR rate would apply. The question now remains whether it would be only the LIBOR rate or there shall be a mark up added to the LIBOR rate. We note that that the credit ratings of the parties to the transaction are important factor and the Coordinate Bench of Mumbai ITAT in the case of Aurionpro Solution Ltd. vs Addl. CIT in ITA No.7872/Mum/2011, has observed that appropriate rate would be LlBOR plus 2% as the loan has been advanced without any security and guarantee. We note that in the assessee's case also, the loan has been without security and guarantee. We note that considering the low credit ratings of the assessee and the subsidiary, a mark-up of 5% was considered by the ld CIT(A), as credit spread based on the size of the loan and functions of the assessee and the subsidiary. As per documents given by the assessee to the lower authorities, the average LIBOR rate for the year 2009-10 was 1.2848%. The ld CIT(A) based on the documents submitted by the assessee, has taken 5% as credit spread over and above the LIBOR, and the arm's length rate was computed at 6.2848% which was less than the rate of 8% at which the loan was extended by the assessee to its associate enterprise(AE) during the period of April 2009 to December 2009. Since the 8% rate of interest at which the loan was extended by the assessee to its AE is more than 6.2848% therefore, the ld CIT(A) held that no transfer pricing adjustment is required for the period April 2009 to December 2009.

Rev enu e -IT A No s. 1 274 & 12 75 / Kol /201 6,andA s se s se e- 5 06 & 507 /Ko l /2 016 As s e s s men t Yea r s: 2 009 -10 & 20 10- 11 2010-11 For 9 months at 8 % and 17-19% LIBOR + 500 basis for balance 3 months at point 5% 2011-12 5% 19% LIB OR 2012-13 5% 19% LIB OR We are told by the ld Counsel, during the course of hearing that assessee has adopted only LIBOR rate and did not add any 'basis of points-bps'.We note that the Coordinate Bench of Delhi in the case of Cotton Naturals 22 ITR 438 (Trib-Delhi), has held that financial position and credit rating of the subsidiary would be broadly same as the holding company and LIBOR should be taken as bench-mark without going into aspects like financial health of the subsidiary. With respect to the comparable rates of interest for loan to subsidiary in foreign currency, it is judicially accepted that LIBOR rate would apply. The question now remains whether it would be only the LIBOR rate or there shall be a mark up added to the LIBOR rate. It was held by the Tribunal in Cotton Naturals (supra) that the credit ratings of the parties to the transaction are important factor. In this connection, in one of the cited cases, viz. Aurionpro Solution Ltd. vs Addl. CIT in ITA No.7872/Mum/2011, the Coordinate bench of Mumbai, has observed that appropriate rate would be LlBOR plus 2% as the loan has been advanced without any security and guarantee. We note that in the assessee's case also, the loan has been advanced without security and guarantee.We also note that Coordinate Bench of ITAT Kolkata in assessee`s own case being ITA No. 2194/Kol/2014, for A.Y. 2008-09 has held that arm`s length price of the interest should be computed by applying LIBOR rate and domestic interest rate would not be relevant.