Torch of Change is not meant to replace an existing torch. It is meant to decorate/be hung on an empty wall.
Once placed on a wall, you can change the colour of the flame amongst the following colours: red , green , and lightblue . It will then emit light in the selected colour. You can also turn it off. That means that the item can be on four different states when it is on a wall.
If you try to put the Torch of Change on a place where a torch already exists, you will get a message stating "There is not enough room.". I have tested this and taken a screenshot to show that:
This item can be purchased in the store for 120 Tibia Coins.