PCIT Vs Tupperware India Pvt. Ltd. (Delhi High Court)
The Delhi High Court considered two appeals filed by the Revenue under Section 260A of the Income Tax Act, 1961, challenging a common order dated 12 March 2025 passed by the Income Tax Appellate Tribunal (ITAT) for Assessment Years (AYs) 2015–16 and 2016–17. The High Court first condoned the delays in filing and refiling the appeals and allowed the exemption applications. The substantive challenge concerned transfer pricing adjustments relating to benchmarking of royalty payments and selection of comparables.
During the hearing, counsel for the Revenue fairly conceded that the issues raised in the present appeals were already decided against the Revenue and in favour of the assessee for earlier assessment years, namely AYs 2013–14 and 2014–15. The Court was shown its earlier judgments dismissing Revenue appeals for those years, wherein it had upheld the ITAT’s findings and concluded that no substantial question of law arose.
In the earlier decisions relied upon, the High Court had noted that the ITAT had accepted the Comparable Uncontrolled Price (CUP) method as the most appropriate method for benchmarking royalty payments. The Tribunal had examined objections raised by the Transfer Pricing Officer (TPO) and the Dispute Resolution Panel (DRP) regarding comparability, including differences in geographical regions and product dissimilarity. The ITAT found that both the comparables selected by the TPO and those proposed by the assessee were from the same geographical region and industry, namely kitchenware and home furnishing items. It also held that the rejection of certain comparables on the ground that they involved know-how was incorrect, given the nature of the licence agreement and supporting evidence.
