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5.5 Without prejudice to the above grounds, the learned DCIT/DRP erred in law by using prime lending rate instead of LIBOR for determining the arm's length interest amount.

5.6 The learned DCII erred in applying the rate of 40% on the interest income as against the rate prescribed in section 115A of the Act.

5.7 Without prejudice to the above, the learned DRP / DCIT erred in not appreciating that even if the interest income is considered as part of business income, there should not be any income chargeable to tax since the expenditure paid by the appellant (i.e. commission and marketing fees paid to STNIPL) is sufficient to absorb its income and accordingly there will be no loss to the revenue.

12. The DRP further deliberated on the transfer pricing adjustment of Rs. 2,10,24,208/- carried out by the A.O/TPO by determining the arms length interest as per Indian PLR of SBI of 14.25% of the loan (interest free) that was provided by the assessee to its AE viz. ADSIL. It was inter alia submitted by the assessee that for the purpose of computing the arm‟s length rate of interest in respect of the interest free loan given by the assessee to its AE, viz. ADSIL the LIBOR rate prevailing as on 31.03.2012 should have been considered and not the Indian PLR.

"We find that the interest free loan which was advanced by the assessee to its NMC, viz. ADSIL, was treated by the revenue as an international transaction whose arms length interest was worked out by applying the Indian PLR of 10.50%. The ld. A.R had submitted before us that as the aforesaid amount was advanced by the assessee to its WOS, viz. ADSIL with a view to financially strengthen the said company which was the National marketing company for the assessee in India, as the same would had facilitated garnering of more customers for the assessee in the India Market, therefore, the said advancing of interest free loan which was prompted by business prudence and commercial reasons, thus not liable to be subjected to a transfer pricing adjustment. We are unable to persuade ourselves to accept the aforesaid contention of the ld. A.R. We are of the considered view that as the advancing of the aforesaid loan by the assessee to ADSIL was an international transaction, therefore, the transfer pricing provisions stood invoked. We may herein observe that the ld. A.R had not drawn our attention to any judicial pronouncement which would go to support his aforesaid view. We find that though the ld. A.R had assailed the transfer pricing adjustment in respect of the aforesaid transaction for the reason that as the assessee had not charged any specified price, therefore, no transfer pricing adjustment in respect of the aforesaid transaction was permissible, but however, he had during the course of hearing of the appeal sbmitted that he was not pressing the said contention. We find that the ld. A.R had during the course of the hearing of the appeal focussed his contentions in respect of the transfer pricing adjustment, on the ground that the ALP interest rate should not have exceeded the LIBOR being the rate of interest applicable to USD. We find substantial force in the contention raised by the ld. A.R before us. We have given a thoughtful consideration and are unable to persuade ourselves to be in agreement with the contention of the ld. D.R that the Hon‟ble High Court of Bombay in the case of CIT Vs. Tata Autocomp Systems ltd. (2015) 374 ITR 516 (Bom) had concluded that ALP in the case of loans advanced to AE was to be determined on the basis of rate of interest being charged in the country where the loan is received/consumed. We have perused the judgment of the Hon‟ble High Court of Bombay in the case of Tata Autocomp Systems Ltd. (supra) and find that the Hon‟ble High Court had as a matter of fact dismissed the appeal of the revenue, for the reason that as the Tribunal while passing the impugned order in the case of Tata Autocomp Systems Ltd. Vs. ACIT (2012) (21 taxmann.com 6) (Mum) had followed the view taken by the coordinate benches of the Tribunal in the case of V.V.F Ltd. Vs. Dy. CIT (ITA No. 673/Mum/2006) and Dy. CIT Vs. Tech Mahindra Ltd. (2011) 12 taxmann.ocm 132 (Mum), however, neither of the said orders were further assailed by the revenue. Thus, the High Court taking cognizance of the fact that the revenue had accepted the decision of the Tribunal in the case of V.V.F. Ltd. (supra) and Tech Mahindra Ltd. (supra), therefore, it would not be permitted on the part of the revenue to take a different view, as against the one which had been allowed to attain finality. We find that it was on the basis of the aforesaid observations that the Hon‟ble High Court had declined Sabre Asia Pacific Pte ltd. Vs. DCIT (IT)-1(1)(1) & Sabre Asia Pacific Pte. Ltd. Vs. ACIT (IT)-4(2)(1) to entertain the appeal filed by the revenue. We thus are of the considered view that the contention of the ld. D.R that the Hon‟ble High Court had observed that the ALP in respect of interest on the loans advanced to AE‟s is to be determined on the basis of rate of interest being charged in the country where the loans is received/consumed is absolutely misconceived. We are rather persuaded to be in agreement with the contention of the ld. A.R that the issue as regards the determination of the ALP in respect of interest on loan advanced to AE was looked into by the Hon‟ble High Court of Bombay in the case of CIT-1 Vs. M/s VFS Global Services Pvt. Ltd. (ITA No. 336/Mum/2015, dated 19.01.2017), wherein the High Court dealing with the contention of the revenue that the Tribunal was not justified in directing the A.O/TPO to determine the ALP interest by considering the LIBOR plus 2%, as against the rates of the Indian Market, had observed that the view of the Tribunal as regards determination of the ALP interest at LIBOR plus 2% appeared to be in conformity with the earlier judgment of the High Court in the case of CIT-2 Vs. Tata Autocomp Systems Ltd. (ITA No. 1320/Mum/2012, dated 03.02.2015). We are of the considered view that the Hon‟ble High Court of Bombay while disposing of the appeal filed by the revenue in the case of CIT-1 Vs. M/s V.F.S Global Services Pvt. Ltd. (ITA No. 336/Mum/2015, dated 19.07.2017) was not persuaded to be in agreement with the contention of the revenue that the Tribunal had erred in directing the A.O/TPO to determine the ALP interest by considering the LIBOR plus 2% and not the rates of the Indian Market. We further find that a coordinate bench of the Tribunal, ITAT, Pune Bench "B", Pune, had in the case of Tool Tech Global Engineering Pvt. Ltd. Vs. DCIT (ITA No. 273/PN/2014, dated 22.08.2014) had observed that in the case of a transaction in foreign currency between two cross border entities, the ALP should be computed in context of the prevailing lending practises in the international market. The Tribunal had further observed that in respect of such international transactions, the domestic bank rate would not be a sound basis and rather internationally accepted LIBOR rate would be the proper basis for benchmarking the ALP interest rate in respect of the said transactions. We further find that the Hon‟ble High Court of Delhi in the case of Commissioner of Income Tax-1 Vs. M/s Cotton Naturals (I) Pvt. Ltd. (ITA No. 233/Mum/2014, dated 27.03.2015) had observed that the interest rate applicable should be that of the currency concerned in which the loan has to be repaid. The Hon‟ble High Court had disagreed with the view that the interest rates were to be computed on the basis of interest payable on the currency or legal tender of the place or the country of residence of either party. It was further observed by the High Court that the currency in which the loan is to be repaid normally determined the rate of interest. The aforesaid judgment of the Hon‟ble High Court of Delhi in the case of M/s Cotton Naturals (I) Pvt. Ltd. (supra) had thereafter been followed by a coordinate bench of the Tribunal in the case of M/s Firestar International Pvt. Ltd. Vs. ACIT, Mumbai (ITA No. 488/Mum/2015, dated 31.07.2015). The Tribunal by taking support of the aforesaid judgment of the High Court of Delhi had concluded that the application of the State Bank of India PLR of 11.75% for determining the ALP of the interest on loan advanced in USD by the assessee to its AE, could not be approved. We have deliberated on the issue under consideration and finding ourselves to be in agreement with the view taken in the aforesaid judicial pronouncements, are thus of the considered view that the ALP of the interest on the loans advanced by the assessee to its subsidiary company, viz. ADSIL was to be determined on LIBOR and not as per the Indian PLR rate so adopted by the A.O/TPO. We thus in the backdrop of our aforesaid observations direct the A.O/TPO to take ALP of the interest on the loan advanced by the assessee to ADSIL as per the LIBOR rate plus 2%. We thus in terms of our aforesaid observations partly allow the Ground of appeal No. 5 raised by the assessee before us."

Sabre Asia Pacific Pte ltd. Vs. DCIT (IT)-1(1)(1) & Sabre Asia Pacific Pte. Ltd. Vs. ACIT (IT)-4(2)(1) As the facts and the issue involved in the present appeal of the assessee in context of the TP adjustment as regards the ALP of the notional interest on the loans (interest free) granted by the assessee to its AE viz. ADSIL remains the same as was therein involved in the aforesaid preceding years in the assesse‟s own case for A.Y 2005-06 to A.Y 20-11-12, therefore, we respectfully follow the same. Accordingly, in conformity with the aforesaid view of the Tribunal, we herein direct the A.O/TPO to take the ALP of the notional interest on the loan advanced by the assessee to ADSIL as per the LIBOR rate plus 2%.