2011 (6) TMI 140 - ITAT, MUMBAI

Arms length price - During the assessment proceedings, it was noticed that the assessee had allowed credit to its US based associated enterprises, beyond the stipulated credit period - he stand of the assessee was that excess credit period was allowed to the US AE in view of the liquidity problems faced by the AE, and that, in any event, no such interest is charged from even independent enterprises - Held that: a transaction between the associated enterprises cannot be taken as a comparable for the purpose of application of CUP method. Internal CUP, therefore, can only be a comparable transaction which the assessee enters into with an independent enterprise, while it will be an external CUP when the comparable transaction is between two independent enterprises not involving the assessee - The mere fact that the relief granted by the CIT(A) is upheld, it does not imply that the CIT(A)’s action of confirming the ALP adjustment on the facts of this case, in principle, is upheld too - Decided in the favour of assessee

Regarding deduction u/s 10A - issue is covered, in favour of the assessee, by Special Bench decision in the case of ITO v. Sak Soft Ltd. [2009] 30 SOT 55 (Chennai) and by Tribunal's decision in assessee's own case for the assessment year 2002-03 - Appeal is dismissed