Pr. Commissioner Of Income Tax-7, Delhi v. Sony India Pvt. Ltd.

$~89 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 367/2026, CM APPL. 30411/2026, CM APPL. 30412/2026 PR. COMMISSIONER OF INCOME TAX-7, DELHI.....Appellant Through:

Mr. Puneet Rai, SSC and Mr. Ashvini Kumar and Mr. Rishabh Nangia, JSCs versus SONY INDIA PVT. LTD.

.....Respondent Through:

Mr. Nageswar Rao, Adv.

CORAM:

HON'BLE MR. JUSTICE DINESH MEHTA HON'BLE MR. JUSTICE TEJAS KARIA

O R D E R

% 06.05.2026 CM APPL. 30413/2026 (Delay in re-filing) 1.

For the reasons stated, 60 days' delay in re-filing the appeal is condoned.

2.

The application is allowed.

ITA 367/2026, CM APPL. 30411/2026, CM APPL. 30412/2026 3.

The appeal qua Assessment Year (AY) 2015-16 has been filed seeking adjudication of following proposed questions of law:- "A.

Whether the Hon'ble Tribunal has erred in law and on facts in upholding the contention of the assessee that the Bright Line Test (BLT) is not in accordance with law without appreciating the facts that the BLT was not used as a method to determine the ALP but only as an economic/statistical tool to arrive at the cost of services rendered to foreign enterprise by Indian entity and when the TPO has the The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.

mandate to determine such cost as a primary step in ALP determination as provided under the Rules for A.Y 2015-16, 2017-18 and 201819? B.

Whether the Hon'ble Tribunal has erred in law and on facts in upholding the contention of the assessee that the intensity based adjustment is not in accordance with law without appreciating the facts that the TPO has applied the Transactional Net Margin Method (TNMM) in accordance with Rule 10B(1)(e), and then consistent with Rule 10B(2) read with Rule 10B(3) has made a comparability adjustment to comparables' profit level indicator to neutralize a material functional difference of higher functional intensity of AMP expense borne by the assessee under the Rules for A.Y 2015-16? C.

Whether the Hon'ble Tribunal has erred in directing the deletion of the entire royalty adjustment without appreciating the evidence on record indicating that the assessee had not demonstrated tangible benefits or commercial rationale commensurate with the royalty payment made to its Associated Enterprise under the Rules for A.Y 2015-16, 2017-18 and 2018-19?

D.

Whether in the facts and circumstances of the case the Hon'ble ITAT was correct in not appreciating that third party manufacturers are liable to pay royalty to the AE Sony Corp as these companies are the ultimate users of the intangibles in the form of licensed patents and know-how provided by the AE Sony Corp for manufacturing of licensed products under the Rules for A.Y 2015-16, 2017-18 and 2018-19?

E.

Whether in the facts and circumstances of the case the Hon'ble ITAT was correct in not appreciating that the assessee Sony India Pvt. Ltd. has not used the licensed patents and know-how for manufacturing of licensed products and accordingly it is not liable to pay royalty charge to the owner of the intangibles i.e. the AE Sony Corp under the Rules for A.Y 2015-16, 2017-18 and 2018-19?

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.

F.

Whether the Hon'ble ITAT has not erred in its decision to rely on the decision of the Hon'ble Delhi High Court in the case of Cushman and Wakefield (ITA 475/2012) whereas the issues involved in this case are different from that of the assessee's case as arm's length price of the international transaction related to payment of royalty has been determined by the TPO within the authority as prescribed under section 92C of the Income Tax Act, 1961 for A.Y 2015-16, 2017-18 and 2018-19?

G.

Whether in the facts and circumstances of the case the Hon'ble ITAT was correct in not appreciating the action of the TPO for calculating ALP nil for royalty payment made by the assessee to the AE Sony Corp for the licensed patents and know-how which are actually owned by third parties and not by the AE under the Rules for A.Y 2015-16, 2015-16 and 2017-18?

H.

Whether in the facts and circumstances of the case the Hon'ble ITAT was right in law in considering Febulka Advertising Pvt. Ltd as functionally non comparable without considering the findings of the TPO w.r.t broad level of products similarity under TNMM after conducting a detailed FAR analysis while ITAT has failed to give detailed FAR w.r.t, inclusion and exclusion of comparable under the Rules for A.Y 2015-16?"

4.

Learned counsel for the respondent-assessee at the outset submitted that all the questions proposed by the appellant have already been decided by this Court against the Revenue in assessee's own cases being ITA No. 7/2023 decided on 13.12.2023 and ITA No. 551/2023 decided on 30.09.2024.

5.

He pointed out that so far as question No. A in relation to the method of valuation of transfer pricing is concerned, the Assessing Officer (AO) had adopted a method called Bright Line Test (BLT), whereas this Court vide its The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.

judgment being ITA 7/2023 dated 13.12.2023 has held that since the BLT method is not provided under the Income Tax Act, 1961 or rules framed thereunder, such test being alien to the statutory provisions, cannot be adopted.

6.

Adverting to the remaining questions (i.e question Nos. B to F) relating to royalty payment, learned counsel for the respondent submitted that the Tribunal's order deals with following two aspects:- (i) Whether the transfer pricing adjustment is required to be made in respect of royalty payment?

(ii) And if yes, what should be the method of calculation and quantum of royalty for such adjustment?

7.

Mr. Puneet Rai, learned Senior Standing Counsel for the Income Tax Department was not in a position to dispute the position that aspects have been decided in ITA No. 551/2023 vide judgment dated 30.09.2024 and 7/2023 decided on 13.12.2023. He could not bring to our notice, any judgment of Hon'ble the Supreme Court in which the Apex Court have taken a view other than what has been taken by this Court in assessee's own cases (being ITA No. 7/2023 decided on 13.12.2023 and ITA No. 551/2023 decided on 30.09.2024).

8.

Apart from above questions, another question i.e. question No. H has also been proposed by the appellant.

9.

On the perusal of the order dated 08.08.2025 of the Income Tax Appellate Tribunal (ITAT) (hereinafter referred to as „the Tribunal‟) impugned before us, we find that while accepting the assessee's appeal on this ground, the Tribunal has recorded a finding that Febulka Advertising Pvt. Ltd is engaged in entirely different business and therefore, the figures of The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.

Febulka, that too when they are not available on public domain in its entirety, cannot be taken selectively.

10.

According to us, this aspect essentially involves a finding of fact recorded by the Tribunal on the basis of appreciation of material available on record. It does not give rise to any question of law, much less a substantial question of law.

11.

The question No. H proposed by the appellant being a factual issue, thus, does not call for any interference in limited jurisdiction of this Court under Section 260A of the Act of 1961.

12.

The appeal qua this ground is also rejected.

13.

The appeal thus stands dismissed. Pending applications are disposed of.

DINESH MEHTA, J TEJAS KARIA, J MAY 6, 2026/cd The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.