(Now merged with PPG Asian Mumbai Paints Pvt. Ltd.) 158, Vidyanagari Marg Dani Wootex Compound Kalina, Santacruz(East) Mumbai400 098. PAN : AABCS4378K (Appellant) (Respondent) Assessee by Shri Percy Pardiwala Department by Shri Rajesh Mishra Date of Hearing 04.10.2021 Date of Pronouncement 03.01.2022 ORDER Per Shamim Yahya (AM) : This appeal by the assessee is against the order of the Assessing Officer dated 12.12.2011 pursuant to direction of Dispute Resolution Panel (DRP) dated 9.8.2012 pertaining to assessment year 200809. 2. Grounds of appeal read as under : 1. That on facts and circumstances of the case and in law the Ld AO erred in assessing the income of the Appellant under the normal provisions of the Act at Rs 6,72,57,997 against returned income of Rs 3,99,18,428based on the directions received from Hon'ble Dispute Resolution Panel ("DRP") upholding the adjustment to the transfer price proposed by the learned Transfer Pricing Officer ("Ld TPO"). 2. That on facts and circumstances of the case and in law the Ld AO/TPO erred in proposing and the Hon'ble DRP further erred in upholding an adjustment of Rs 2,73,39,569in respect of the international transactions pertaining to (a) payment for SAP license, (b) cost sharing expenses, and (c) reimbursement of expenses (expenses incurred)alleging that the same to be not at arm's length in terms of the provisions of Sections 92C(1) and 2 P P G C o a ti n g s In d i a P v t. L t d. ( N o w m e r ge d wi th PP G A s i an P ai n ts P v t. L td . ) 92C(2) of the Act read with Rule 10D of the Incometax Rules, 1962 ("the Rules"). 3. That on the facts and circumstances of the case and in law the LdAO/ TPO/ DRP grossly erred in computing the arm's length price at NIL in relation to payment for SAP license, cost sharing expenses, and reimbursement of expenses (expenses incurred)disregarding the provisions of Section 92C read with Rule 10D of the Rules and ignoring the methods prescribed under the Act. 4. That on the facts and circumstances of the case and in law, the LdAO/ TPO/DRP has erred in making a transfer pricing adjustment in relation to the payment for SAP license and cost sharing expenses allegedly ignoring the OECD Transfer Pricing Guidelines, other international and domestic jurisprudence. 5. That on facts and circumstances of the case and in law the Ld AO/TPO/DRP has erred in not appreciating that even after considering payment of SAP license (depreciation), cost sharing expenses and the reimbursement of expenses (expenses incurred) the appellant's margin on a whole entity basis on the application of Transactional Net Margin Method ("TNMM") was higher than the margin earned by the comparable companies. 6. That on facts and circumstances of the case and in law Ld AO/TPO/ DRP has also erred in confirming the payment for SAP license as revenue in nature and disallowing the entire payment cost. 6.1 That on facts and circumstances of the case and in law Ld AO/ DRP had failed to appreciate the business and commercial need by appellant company for implementation of SAP software and erred in upholding the TPO's contention that the cost of SAP license was merely imposed by parent company on the appellant. 6.2That on facts and circumstances of the case and in law Ld AO/TPO/ DRP had erred in brushing aside the additional evidences filed by the appellant company documenting the benefits derived by it from the implementation of SAP software. 6.3 That on facts and circumstances of the case and in law Ld AO/ TPO/ DRP erred in not considering the details of cost incurred by the Parent Company, the basis of cost allocation and the third party supporting evidences placed on record by the appellant company in connection with the purchase of SAP license. 7. That on facts and circumstances of the case and in law Ld AO/TPO/ DRP failed to appreciate the business and commercial need for the appellant for availing the cost sharing services. 3 P P G C o a ti n g s