Functional comparability under the CUP method requires...

Functional comparability under the CUP method requires comparison of functions performed, assets employed and risks assumed; third-party guarantee data must be disclosed for effective rebuttal. In the absence of reliable comparable uncontrolled transactions or a proper FAR analysis, the transfer-pricing adjustment for counter-guarantee support was deleted. Lending income could not be equally allocated where the overseas entity funded loans and assumed substantive lending risks, and no reliable comparable or prescribed method disproved the attribution. An arm's length price cannot be determined ad hoc after rejecting TNMM without a comparable or prescribed method. Regional support expenditure was supported by evidence of services, business nexus, costs and allocation; the alternative disallowance was deleted. Mark-to-market loss on stock-in-trade investments was allowable under consistent cost-or-market valuation. Penalty initiation was premature; TDS and tax computation were remitted for verification.