PR. COMMISSIONER OF INCOME TAX, DELHI-7 vs. TUPPERWARE INDIA PVT. LTD.

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ITA/304/2023HC DelhiDLHC01020726202314 March 2024Bench: HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV,HON'BLE MR. JUSTICE YASHWANT VARMA3 pages
AI SummaryDismissed

What did the High Court hold?

The Delhi High Court held that the appeal raised no substantial question of law and saw no reason to interfere with the ITAT's impugned order. The High Court noted that the ITAT had found that royalty agreements operating in different geographical regions could be applied as a filter, especially since the TPO had accepted foreign jurisdiction royalty agreements. The ITAT had also observed that the objection relating to the difference in geographical region did not hold good as the TPO's own comparables were from the USA. Regarding product dissimilarity, the ITAT found that all comparables belonged to the same industry ('kitchenware and home furnishing items'). The ITAT further directed the inclusion of eight comparables proposed by the assessee, finding them to be from the same geography and industry, and that the TPO's rejection of some of these was incorrect. The High Court concluded that the ITAT's findings on the comparables were sound and did not warrant interference.

What were the facts?

The appeal before the Delhi High Court was filed by the Pr. Commissioner of Income Tax, Delhi-7 against an order of the Income Tax Appellate Tribunal (ITAT). The assessee is Tupperware India Pvt. Ltd. The assessment year(s) are not explicitly stated. The High Court was considering the appeal against the ITAT's order dated 25 May 2023. The appellant sought condonation of 93 days' delay in filing the appeal, which was allowed. The primary issue before the High Court was related to the selection of comparable companies for benchmarking royalty payments. The High Court noted that the ITAT had dealt with the issue of comparables accepted by the Transfer Pricing Officer (TPO) and the Dispute Resolution Panel (DRP).

What were the issues?

1. Whether on the facts and in the circumstances of the case, the Hon'ble ITAT erred in not considering the TPO’s findings that the comparables proposed by the assessee are not acceptable as they do not have similar FAR as that of the assessee? Assessee's contentions (as reflected in ITAT's findings): The assessee contended that royalty agreements operating in different geographical regions can be applied as a filter, as the TPO himself had accepted royalty agreements from foreign jurisdictions. The assessee argued that objections regarding geographical region and product dissimilarity were not valid, as the comparables selected by the TPO and the assessee belonged to the same industry ('kitchenware and home furnishing items'). The assessee also argued that the TPO's rejection of certain comparables (Mikasa Inc. and Oneida Ltd.) was incorrect, as the assessee paid royalty for trademark and marketing information/know-how, and these comparables were from the same geography and industry. Revenue's contentions (as reflected in ITAT's findings and High Court's framing): The revenue, through the TPO and DRP, raised objections regarding the geographical region of the comparables (USA) and product dissimilarity. The TPO's findings, which the appellant sought to uphold, were that the comparables proposed by the assessee were not acceptable due to dissimilar FAR.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

$~24 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 304/2023

PR. COMMISSIONER OF INCOME TAX, DELHI-7 ..... Appellant Through: Mr. Puneet Rai, Sr.SC with Mr. Rishabh Nangia and Mr. Ashvini Kumar, Jr.SCs along with Mr. Nikhil Jain, Adv.

versus

TUPPERWARE INDIA PVT. LTD. ..... Respondent Through: Mr. Rohit Tiwari, Ms. Tanya, Mr. Shobhit Tiwari, Ms. Shivani and Mr. Jaind Kumar Jaiswal, Advs.

CORAM:

HON'BLE MR. JUSTICE YASHWANT VARMA

HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV

O R D E R %

14.03.2024

CM APPL. 28277/2023 (93 Days’ Delay) 1. This is an application filed by the appellant seeking condonation of 93 days’ delay in filing the present appeal. 2. For the reasons stated in the application, the delay of 93 days in filing the appeal is condoned. 3. Application is disposed of. ITA 304/2023 4. The order dated 25 May 2023 reflects that the primary question which was presented for our consideration was found to have been answered against the appellant by virtue of the judgment rendered by This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 03/07/2025 at 00:19:21

this Court in Sony Ericsson Mobile Communications India Pvt. Ltd. v. Commissioner of Income Tax - III, [2015 SCC OnLine Del 8083]. 5. When the appeal was taken up today, the solitary question which Mr. Rai chose to address was question B1, which reads as under: “B1. Whether on the facts and in the circumstances of the case, Hon’ble ITAT erred in not considering the TPO’s findings that the comparables proposed by the assessee are not acceptable as they do not have similar FAR as that of the assessee?”

6.

We note that while dealing with the issue of comparables as accepted and included by the Transfer Pricing Officer [“TPO”] as well as the Dispute Resolution Panel [“DRP”], the Income Tax Appellate Tribunal [“ITAT”] has found as follows: “16. We have heard the rival submissions of the Ld. Representative of the parties and perused the material available on records. The Ld. TPO as well as the Hon’ble DRP has upheld CUP as the most appropriate method for benchmarking transactions with respect to payment of royalty. Since the application of CUP is not disputed either by Ld. AR or DR, we hold CUP to be the most appropriate method for benchmarking the payment of royalty. The issue thus remaining for our consideration is with respect to inclusion / exclusion of comparables.

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16.2 We find force in the contention of the assessee that royalty agreements operating in different geographical regions can be applied as a filter as the Ld. TPO himself has accepted royalty agreements operating in foreign jurisdictions. While the primary objection of the Hon’ble DRP in respect of comparability analysis is that the comparable selected by the assessee are from a different geographical region (i.e. USA), we observe that the three comparables considered by the Ld. TPO in the remand report are from the same geographical location (i.e. USA) and hence in our view the objection relating to difference in geographical region does not hold good.

16.3 So far as the objection of the Hon’ble DRP on the product dissimilarity is concerned, it is observed from the perusal of the This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 03/07/2025 at 00:19:21

description of the agreements as provided in the Royaltstat database, all the three comparables selected by the Ld. TPO and the comparables selected by the assessee belong to same industry i.e. “kitchenware and home furnishing items” and hence these are valid comparables.”

7.

The assessee also sought inclusion of further comparables as would be evident from paragraph No.16.5 of the ITAT’s order. Dealing with the aforesaid, the ITAT has held as under: “17. Perusal of the above chart shows that five comparables selected by the assessee are from same geography i.e. USA and the same industry i.e. "Kitchenware and home furnishing items” as the comparables considered by the Ld. TPO. The Ld. TPO rejected two of his own comparables i.e. Mikasa Inc. and Oneida Ltd. by holding that these two comparables are providing know-how whereas the assessee is not obtaining know-how which in our considered view is incorrect as evident from the license agreement as well as other documentary evidence submitted by the assessee. The assessee has paid royalty for use of trademark and marketing information /marketing know-how. All the eight comparables listed in the chart in para 16.5 above are from the same geography and same industry and hence are valid comparables to that of the assessee. Accordingly, the Ld. AO/TPO is directed to include the aforesaid eight comparables in the final set of comparable agreements for the purpose of benchmarking the payment of royalty by the assessee. Ground No. 6 and 9 are thus allowed.”

The inclusion of eight comparables was not questioned before us. 8. Consequently, we find that the appeal raises no substantial question of law and we see no reason to interfere with the ITAT’s impugned order. The appeal shall thus stand dismissed.

YASHWANT VARMA, J.

PURUSHAINDRA KUMAR KAURAV, J. MARCH 14, 2024/p This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 03/07/2025 at 00:19:21

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