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A.Y. 2009-2010 Name of Interest ALP interest Differential DRP ruling borrower charged by determined by interest (Rs.) (AE) appellant TPO (%) (%) Lacock 5% 6.5% 4,71,26,437 Confirmed Holdings, (EURIBOR+2.5%) TPO's ALP Cyprus Falcon, 9.5% (MXN 12% 3,40,04,535 Confirmed Mexico TIIE 28d TPO's ALP plus 1.5%) Total 8,11,30,972 A.Y. 2010-2011 Name of Interest ALP interest Differential DRP ruling borrower (AE) charged by determined interest (Rs.) appellant (%) by TPO (%) Lacock 4.57% 7% EURIBOR 8,26,24,373 Confirmed Holdings, + 200 BPS TPO's ALP Cyprus DRL Swiss 1.3% 7% 9,45,98,323 Confirmed LIBOR + 200 TPO's ALP BPS DRL Brazil 1.64% 7% LIBOR + 3,61,20,148 Confirmed 200 BPS TPO's ALP Total 21,33,42,845 ITA.Nos.294/H/2014, 458 & 463/H/2015 Dr. Reddy's Laboratories Limited, Hyderabad.

31.1. Before us, the Learned Counsel for the Assessee contends that as per the decision of the ITAT, Hyderabad Bench in the case of Four Soft Limited 164 TTJ 561 whenever a loan was given in foreign currency LIBOR interest rate should be considered for benchmarking the interest and not local interest rates of the respective countries. Reliance was placed upon the decision of the Coordinate Bench in assessee's own case for the A.Y. 2006-07 (ITA.No.1605/Hyd/2010 read with M.A.No.217/H/13) wherein the Tribunal accepted LIBOR+ 2% as the comparable rate for benchmarking the interest. The DRP for the A.Y. 2008-2009 has accepted LIBOR+ 2% as ALP.

ITA.Nos.294/H/2014, 458 & 463/H/2015 Dr. Reddy's Laboratories Limited, Hyderabad.

33. Joining the issue, the Learned Counsel for the Assessee submitted that DRP has erroneously mentioned that the ITAT, Hyderabad Bench has held that respective countries foreign currency lending rate should be considered instead of LIBOR. It was strongly contended that LIBOR is a comparable rate for benchmarking interest and not local interest rates in the respective countries. It was also contended that for the A.Y. 2006-2007 the Tribunal, in principle, accepted LIBOR + 200 basis points which works-out to 7% in that year and therefore, it was accepted by the assessee. For the A.Y. 2007-08 though LIBOR + 2% is accepted as ALP, it was wrongly mentioned that LIBOR + 2% or 7%, whichever is higher, to be considered, while following the order of the Tribunal in the assessee's own case for the earlier year. It was also submitted that the assessee is in the process of filing M.A. against the ITAT order for the A.Y. 2007-08. Even otherwise various Benches of the Tribunal consistently held that for benchmarking ALP LIBOR + 2% should be adopted. Reliance was also placed upon the decision of the ITAT, Chennai Bench in the case of Siva Industries Ltd., 145 TTJ 497 and also the decision of the Tribunal in Northgate Technologies Ltd., vs. DCIT (2014) 148 ITD 433 Hyd); in both the cases the matter was remitted to the file of the A.O. to verify the actual average LIBOR prevailing in the financial year relevant to the assessment year under consideration.

36. We have carefully considered the rival submissions and perused the material on record. The principle that emerges from the decisions cited by the Learned Counsel for the Assessee particularly in assessee's own case for the earlier years, show that benchmarking of ALP should be LIBOR + 200 basis points and TPO should not determine the ALP by taking into consideration the market rate prevailing in the respective countries. Even for A.Y. 2008-2009, the Hyderabad Bench accepted in principle that LIBOR + 200 basis points can be adopted as ALP. Under these circumstances, we set aside the matter to the file of the A.O. who is directed to adopt the LIBOR rate applicable for the years ITA.Nos.294/H/2014, 458 & 463/H/2015 Dr. Reddy's Laboratories Limited, Hyderabad.