The assessee, engaged inter alia in power generation, transferred electricity from eligible units to non-eligible units and claimed deduction under section 80-IA. The TPO, while accepting CUP as the most appropriate method, benchmarked the transactions by adopting average rates of electricity traded on the Indian Energy Exchange (IEX) and made a transfer pricing adjustment on the ground that the transfer was not at market value, resulting in reduction of section 80-IA deduction. The Tribunal held that electricity traded on IEX represents spot market transactions for purchase of power and is materially different from regular supply of electricity by State Electricity Boards or power distribution companies for consumption, and therefore cannot be considered as a comparable uncontrolled transaction. It was held that CUP method can be applied only where there is a high degree of comparability and where differences materially affecting price can be reasonably adjusted, which was not possible in the present case. The Tribunal thus accepted the rates charged by State Electricity Boards as an appropriate external CUP and deleted the transfer pricing adjustment. On appeal, the High Court dismissed the Revenue’s appeal, holding that the Tribunal was justified in concluding that IEX rates see significant  dissimilarity and cannot be applied for determining arm’s length price of specified domestic transactions, and that no substantial question of law arose. (AY.2014-15.)