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4.3 Disregarding the Hon'ble bench's decision in Appellant's own case for AY 2009-10 to AY 2011-12 by not considering the categorical finding of the Hon'ble Tribunal that Modicare Ltd. should not have been taken as a standalone comparable.
4.4 Disregarding the Hon'ble bench's decision in Appellant's own case for AY 2009-10 to AY 2011-12 by not considering the economic adjustments to account for differences in the accounting of certain significant expense items like incentive, high AMP to sales ratio, etc between Modicare Ltd and the Appellant.
"16. We have heard the rival submissions and also perused the relevant findings given in the impugned orders as well as material referred to before us at the time of hearing. As stated above, in the first round of proceedings, Tribunal though had enlisted various factors and distinguishing features to hold various differences between the Modicare Ltd. and assessee, however remanded the matter back to the TPO to examine the comparability adjustments between the Assessee Company and Modi Care Ltd. The said order of the Tribunal has been set aside by the Hon'ble High Court, wherein Hon'ble High Court, first of all agreed with the contention of the assessee that looking to such a difference, Modicare Ltd. cannot be that straightaway taken as a comparable company, what is required to be seen is: -

Now as is evident from the content of the remand report, the Ld. TPO has admitted that, Modicare Ltd. has not disclosed any business segment for its various products and from this she has inferred that the company does not differentiate its products into separate reportable segments and accordingly, different segment cannot to be considered. As per the Ld. TPO, since Modi Care Ltd. is also into direct selling model as that of the assessee, therefore, it is a most appropriate comparable. She has also referred to marketing and selling function of the assessee-company and also that of Modicare Ltd. regarding their sale and marketing pattern and concluded that Modicare Ltd. is an appropriate comparable as it has direct selling like assessee and hence majority of revenue is from the sale of products similar to that of assessee. Apart from that, she has rejected all the comparables shown by the assessee on the ground that they were dealing in different kind of product segments.

18. First of all, the entire exercise of remand proceedings was circumscribed by the direction of the Hon‟ble High Court as there was clear-cut direction that the appropriateness of including the Modicare Ltd. as comparable has to be seen only when there is availability of data with respect to different product segment and the functional difference with respect to its marketing strategy. If it is an admitted fact that no data of Modi Care Ltd. is available with regard to different product segment, then at the very threshold, it would very difficult to include Modicare Ltd. as a comparable company; and if data itself is not available, then adjustment also cannot be made. Simply because Modicare Ltd. is also involved in direct selling, cannot be taken as a good comparable, especially in the light of the observation and finding of the Hon'ble High Court as reproduced above. Apart from that, we agree with the contention of the learned counsel that, Modi Care Ltd. had a huge diversified product portfolio ranging from personal care, agriculture, Tea, Jewellery, Healthcare, cosmetics, etc. which had different profitability depending upon market factors. Different product items would involve different level of assets, risks and market which may affect gross margins. Though it is not always necessary under resale price analysis that each product line distributed should be examined, but there should be broadly similar products so that gross compensation of the functions performed, that is, marketing and selling functions can be analysed. If reliable data for the various product and marketing strategy is not available, then accurate comparability adjustments would be very difficult to carry out. Another distinctive feature, which we have noted is that, Oriflamme India records the sale, net of discounts/ incentives paid to its agent/consultant and that is the reason why the gross profit margin is lower. On the other hand, in the case of Modicare Ltd. discount given to the consultants/agents has been categorized as „incentives‟ which has been taken below the line in the Profit & Loss account treating to be a part of operating expenses. Because of the difference in accounting treatment, there is a gap between gross profit margin and net profit margin disclosed by the Modicare Ltd., which can be seen from the annual account that the gross profit margin of Modicare Ltd has been shown at 76.47%, whereas the net profit margin is at only 2.25%. Thus, there is substantial variance in the gross and net profit margin levels, which indicates that Modicare Ltd. is incurring heavy operating expenses and also substantiates heavy functions at the operating level. Further, Modicare Ltd. has significant AMP expenses of 7.32% which in the case of the assessee is only 0.94%. If a distributor is incurring substantial AMP expenses then it cannot be compared with routine distributor under RPM as it tantamount to value addition. This also goes to show Modicare Ltd. has different functions as compared to the assessee. There is also difference in the case of goods sold ratio and value-added expenses which is apparent from the fact that in case of Modi Care Ltd. the cost of goods sold ranges from 22% to 28% of its total operating cost and value-added expenses/operating expenses are more than 70%. Modicare Ltd. has also recorded franchisee expenses and hence it cannot be inferred wholly as a direct seller. In view of such differences, it would be very difficult to carry out adjustment especially with regard to the product portfolio, functional portfolio, etc. Adjustment if at all can be made would be to some extent of differential accounting treatment for incentive/ discount. Even the TPO in her remand report has unable to demonstrate incomparable product profile of Modi Care Ltd. and assessee and how the comparability adjustment is possible on account of such huge difference in product profile. Further, the service fee earned by the assessee is on account of renewal fees and handling fees received from the individual consultants, engaged in distribution of assessee‟s product and directly related to assessee‟s business. Whereas, the service fee earned by Modi Care Ltd. is on account of annual maintenance contract (AMC). This factor also vitiates the comparability analysis.