assessee had benchmarked the
guarantee fees on the basis of an Internal CUP i.e as per the average of the
guarantee fees that ... submitted by the ld. A.R that the Internal CUP
adopted by the assessee for benchmarking the transaction of providing
guarantee fees was rejected
appreciating that purchase of power
from SEB at Kota is an internal CUP data similar to the sale of power
by appellant's power ... considered the internal cup as external cup. At the same time,
the learned dispute resolution panel has accepted the internal cup
in case of power
power. The Ld. AR submitted that the assessee had followed internal CUP
Method. The non-eligible units were procuring power both from the CPPs ... broadly classified into two categories viz., Internal CUP Method &
External CUP Method. Under the Internal CUP Method, the controlled
transactions between the AEs involving
other words, the assessee benchmarked the
same on the basis of internal CUP.
However, Ld. TPO, rejecting the rate, worked out average Bank Guarantee
Rate ... Regarding benchmarking of loans, it was held that internal CUP used by the
assessee was not appropriate and Ld. TPO correctly used external CUP.
Therefore
benchmarked its international
transactions by adopting TNMM as most appropriate method. The TPO
did not accept TNMM method and applied internal CUP being the
price ... international transaction entered in current year.
6.2 The another aspect of considering the said price between GESA and
assessee as internal CUP is that
broadly classified into two categories
viz., Internal CUP Method & External CUP Method. Under the Internal CUP Method,
the controlled transactions between the AEs involving ... represent internal comparable arm's length rate. We
accordingly find sufficient merit in the benchmarking analysis undertaken by the
assessee applying internal CUP Method
rule, is taken as ALP with the AE. The Internal
CUP method envisages comparing the uncontrolled transactions
of the assessee itself with other unrelated parties ... price data under similar circumstances of
transactions with AE. Ordinarily the Internal CUP method
should be preferred over the External CUP method as it
neutralizes
entered into the following international
transactions with its AEs;
Table 1- List of International Transactions
Nature of International
Sl.No Amount in (INR) MAM Used ... Rules, a CUP, however, can be either
(a) Internal CUP - is available if either of the party to a controlled
transaction enters into transaction with
Kotak Mahindra Bank. To bench mark the transaction
the assessee applied internal CUP and determine Arms Length Price (ALP) of
guarantee commission ... loans by
its foreign AE on the basis of the Internal CUP i.e guarantee commission that
was paid by the assessee to a bank
valuer. Therefore, it
was difficult to benchmark the transactions under internal CUP method
as sought by Ld. TPO. Finally, the impugned penalty was deleted ... laid stress is that the assessee could have
followed the internal CUP method to work out the arm's length price in respect
