TaxTMI 
TaxTMI 
2018 (4) TMI 935
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....on of the other comparables, (which are involved in trading in similar products), having regard to the facts and circumstances of the case?" 3. The appellant is a wholly owned subsidiary of Oriflame Investments Limited, Mauritius. Its business is the distribution and sale of cosmetic products primarily through direct selling channel. The direct seller to individual intermediaries is characterized as "consultant" who then sells the products to the user. This distribution system does not involve other trade intermediaries, as the whole-sellers, distributors and stockist etc. The assessee offered its income tax return and also filed transfer pricing reports, as required, as it was involved in internal transaction of the filing within the me....
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....at having regard to these functional differences, the assessee had offered other comparables that did not involve direct marketing but were trading entities with appropriate adjustments having regard to the dissimilarities that could be eliminated and appropriately adjusted. These issues were, however, not considered and no findings were returned. 4. Learned counsel for the Revenue relied upon Rule 10B of the Income Tax Rules, 1962 and submitted that the impugned order should not be interfered with. It was stated that the dissimilarity, if any and even the appropriateness of the "Most Appropriate Method" can however be argued by the assessee consequent upon the remand. It is stated that appropriate adjustment with regard to the allege....
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...., thirdly its discounts are below the line expense and Revenue recognition policies are also significantly incomparable; fourthly it has high AMP spend; fifthly it has fluctuating sales; its incentives schemes are different it has wide variation between its gross margins and net margins thereby giving weight to the allegation that heavy functions are being performed at the operating level". 5. Its final conclusions with respect to Modicare Ltd. include the observations that the comparable company differed from the assessee in reporting its cost. The highlighted differences were in regard to the discount, transportation costs, insurance and performing the warranty function as operating expenses or its costs of goods sold or the difference....
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....a standalone comparable as has been done by the tax authorities even then adjustments proposed by the tax payer on valid grounds namely incomparable activities, functions accounting and Revenue recognition policies etc. is necessitated. We are given to understand that service income has been excluded by the TPO himself in the subsequent years and in fact in one of the years in the present proceedings. It has been argued that if the adjustments are thus made then no adjustments to be arm's length price of the assessee would be necessitated. We note that the tax authorities have not considered the calculations as principally they have been of the opinion that no relief was warranted. Holding the said approach of the tax authorities contrary t....
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....in as below: S.N. Product Sales (INR) % of the total turnover product 1 Laundry and Care Home 78,765,810 14.34% 2 Personal Care 120,292,729 21.89% 3 Agriculture 79,718,481 14.51% 4 Tea 8,045,875 1.46% 5 Jewellery 53,766,590 9.79% 6 Cosmetics 86,129,350 15.68% 7 Healthcare 88,886,747 16.18% 8 Others 33,819,599 6.16% Total 549,425,182 7. The assessee argued that the dissimilarity with respect to the products sold and the proportion borne by each of the turnover cannot but impact the profitability of the entity as a whole and further emphasized that segmental laid for each of these product lines is miss....
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....d on these two aspects i.e. firstly, the appropriateness of including Modicare Ltd. having regard to the availability of data with respect to the different product segments, and secondly, involving the comparable, the functional difference with respect to its marketing strategy (i.e. discount, transportation costs, insurance and performing the warranty function). Having regard to the factors mentioned in clause 5.10 of the impugned order, the ITAT is also directed to re-examine whether and to what extent adjustment can be reasonably made, having regard to the available data in respect to the trading comparables offered for ALP determination, for all the relevant years by the assessee. It is also directed to consider the feasibility again ha....