Adjudicating the matter in favour of the assessee, the Hon’ble Tribunal held that when the borrower has no discretion of using funds gainfully, commercial interest rates do not come into play at all. When CUP method is to be adopted for ascertaining the ALP of providing wherewithal to SPV, for achieving its objectives and purpose, arm’s length consideration thereof could at best be corresponding gain to SPV concerned directly or indirectly. There cannot be a transaction, between independent enterprises, of interest-free debt funding of an overseas SPV by its sponsorer if such a transaction between independent enterprises is at all hypothetically possible, arm’s length interest on such funding will be ‘nil’ and if there has to be an arm’s length consideration under CUP method, other than interest for such funding it has to be net effective gains-direct and indirect, attributable to risks assumed by sponsorer of SPV, to SPV in question. The Tribunal held that when the assessee already had an obligation to finance transaction of acquisition of target company by SPVs, same obligation being reiterated, in different words, did not amount to a performance guarantee by SPV and if such a commitment was reiterated for performance of own obligations, reiteration of this own commitment could not have an arm’s length price. Further, since assessee-company was de facto beneficiary of this transaction, assessee-company could not be treated as a guarantor but rather as a primary obligor for its own transaction undertaken through SPV. Accordingly, impugned ALP adjustment, on CUP basis, was not sustainable. (AY.2009-10)