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4. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in directing the AO/TPO to adopt only LIBOR rate as ALP and deleting the adjustment u/s.92CA of Rs.4,27,78,520/- made in this regard, relying on the order passed u/s.92CA(3) for A.Y. 2012-13 and A.Y. 2013-14, whereas in the said orders the assessee has offered LIBOR + spread and AO/TPO has also benchmarked the transaction by adopting LIBOR + spread.

Bank Offered Rates] LIBOR. The loan was advanced in 5 tranches during the year and accordingly, the interest was charged at 3 months' average LIBOR rate ranging between 0.29% to 0.30% for actual number of days for which the loan was used by the AE.

2.9.2 The assessee explained that non-residents who wished to invest in South Africa by means of loan capital needs approval from South African Reserve Bank particularly with reference to intended repayment dates and interest rates. The Reserve Bank will not agree to interest rates in excess of prime rate being charged by non-resident shareholders on loans to the South African subsidiaries but loans from non-residents other than shareholder may be allowed to carry interest at prime +2%. The relevant extracts of the regulations were provided to Learned TPO. It was submitted that intra-group loan advanced to Mauritius Entity was ultimately utilized in South Africa since JSWEMML further advanced the said loan to JSW Energy South Africa Ltd. [JSWENRSAL] and in view of the South African Reserve Bank regulation, the Mauritius entity would not be able to charge any interest more than LIBOR from South African Entity. In the aforesaid background, it was submitted that the intra group transaction was to acquire the asset is South Africa and therefore, transaction was at Arm's Length Price as prescribed in the Indian Regulations. In nutshell, it was submitted that due to regulatory restraints of South Africa, the interest rate could not be more than LIBOR rate for any borrowings from any group companies outside South Africa.

M/s JSW Energy Limited Assessment Years: 2011-12 & 2012-13 2.9.3 Without prejudice to the above submissions, the assessee benchmarked the loan transaction on the basis of External Comparable Uncontrolled Price [CUP] Method by comparing the interest rates at which the independent parties with similar credit ratings would be able to obtain intra-group loans. The AE was selected as the tested party and its credit rating was determined to be Baa1 (Moody; equivalent to S&P BBB+) which fall in the lower medium investment grade. Selecting the borrower country to be Mauritius / South Africa / USA, the assessee arrived at mean ALP margin of 243.83 basis points over LIBOR. Applying the spread of 243.83 basis point to LIBOR, the ALP interest was computed to be US Dollars 367598 (INR Equivalent Rs.164.13 Lacs) as against Rs.13.82 Lacs charged by the assessee from its AE. The assessee, in support of LIBOR, also submitted that the loans were advanced from internal accruals and it did not have any foreign borrowings. The weighted average of domestic borrowings was computed as 10.14% as per the workings submitted by the assessee. 2.9.4 However, upon due consideration, the Ld. TPO opined that the regulatory restriction imposed under South African Regulations would not be determinative since the loan was advanced to Mauritius entity and not to South African entity. Further, the regulatory authority of any country would not take into account the transfer pricing provisions to determine the appropriate rates which could be considered as Arm' Length Price for interest payment. Drawing analogy from the decision rendered in Coca-Cola India Inc. 309 ITR 194 that the royalty rates permitted by RBI would not represent ALP of any international transactions, Ld. TPO opined that determination of ALP was to be M/s JSW Energy Limited Assessment Years: 2011-12 & 2012-13 examined from the point of view of Transfer Pricing Provisions under the Income Tax Act.

2.14 Now the only question that survives for our consideration is the determination of ALP rate keeping in view the facts and M/s JSW Energy Limited Assessment Years: 2011-12 & 2012-13 circumstances of the case. The Ld. first appellate authority has confirmed the determination of ALP on the basis of LIBOR only without any spread-over. However, the said rate, in our opinion, represent inter- bank rates which are applicable in case of entities having highest credit rating. The same is also fortified by the fact that the assessee, itself, has assigned a rating of Baa1 / BBB+ to its AE while benchmarking the transactions. The said rating represents 'lower medium investment grade rating. Therefore, the determination of ALP merely on the basis of LIBOR, in our considered opinion, would not be justified. During the course of proceedings before Ld. TPO, the assessee had arrived at mean spread of 243.83 basis points over LIBOR which is evident from page nos. 5-6 of Ld. TPO's order. The computation of the same has nowhere been disputed by the revenue. Applying LIBOR + spread-over, ALP interest has been worked out to be Rs.1,64,13,241/-. We are of the considered opinion that this spread over as computed by the assessee was undisputed, quite fair and reasonable and the same was to be accepted. Accordingly, we confirm the ALP rate of LIBOR + 2.4383% as computed by the assessee in the alternative submissions made before Ld. TPO. The impugned order stand modified to that extent. The Ld. TPO / Ld. AO is directed to recompute the income of the assessee in terms of our direction. Accordingly, Ground Nos. 1 & 2 stands dismissed. Ground No.3 stand allowed. Ground No. 4 stands partly allowed. 2.15 The appeal of the revenue stands partly allowed in terms of our above order.