ECONOMICS

Detailed explanation-1: -The CUP method compares the price for property or services transferred in a controlled transaction to the price charged for property or services transferred in a comparable uncontrolled transaction in comparable circumstances.

Detailed explanation-2: -The CUP method is the most direct way of ascertaining an arm’s length price. It compares the price charged for a property or services transferred in a controlled transaction to the price charged for a property or services transferred in a comparable uncontrolled transaction, in comparable circumstances.

Detailed explanation-3: -The CUP method is used for transfers of tangible property, while the CUT method is used for transfers of intangible property. Under the CUP and CUT methods, the amount charged in the transfer of property in a controlled transaction is compared to the amount charged in a comparable uncontrolled transactions.

Detailed explanation-4: -The advantages of the CUP method are: It’s the most direct way of finding arm’s length conditions, as it uses the market price. Plus, it’s the OECD’s preferred choice for any analysis where comparables data is available.