AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (4) TMI 239
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....s by treating it as Fees for Technical Services ('FTS') as per the provisions of section 9(1)(vii) of the Income-tax Act, 1961 (the Act) without appreciating that there are no technical services rendered at all. Accordingly, the Appellant prays that the aforesaid addition made by the Ld. AO ought to be deleted. Ground No. 2 On the facts and in the circumstances of the case and in law, the Hon'ble DRP has erred in confirming the action of the Ld. AO of making an addition of INR 18,65,00,000 received from the Indian customers as subscription fees by the Appellant by treating it as Fees for Included Services ('FIS') under Article 12 of the tax treaty between India and the United States of America (India-USA DTAA') without appreciating that even if services are considered to be rendered, these services do not "make available" any technical knowledge to the recipient and hence are not taxable in India. Accordingly, the Appellant prays that the beneficial provisions of India-USA DTAA be applied in its case. Ground No. 3 On the facts and in the circumstances of the case and in law, the Hon'ble DRP has erred in confirming the action of the Ld. ....
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....taxable in India. Accordingly, the Appellant prays that the beneficial provisions of India-USA DTAA be applied in its case. Ground No. 3 On the facts and in the circumstances of the case and in law, the Hon'ble DRP has erred in confirming the action of the Ld. AO of not concluding that the receipt from subscription fees of INR 7,36,93,619 from Indian subscriber to its Lexis Nexis database is in the nature of "Business Profits" under Article 7 of the India- USA DTAA and not taxable in India as the Appellant did not have a "Permanent Establishment" in India under Article 5 of the India-USA DTAA. Accordingly, the Appellant prays that the addition made by the Ld. AO ought to be deleted. Ground No. 4 On the facts and in the circumstances of the case and in law, the Ld. AO has erred in initiating the penalty proceedings under section 270A of the Act. Accordingly, the Appellant prays that the penalty proceedings initiated by the Ld. AO ought to be dropped. The above grounds are independent of and without prejudice to each other. The Appellant craves leave to add, alter, amend or withdraw all or any of the Grounds of Appeal and to submit such statements, documents ....
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....re of 'Business Income'. Further contended that the person interested to purchase electronic version of books/journals/articles available on Lexis Nexis can purchase it online by paying the price of the book. The frequent consumers to the books/journals/ articles available on Lexis Nexis, can opt to subscribe to the database for a certain period (subscription) allowing them to access the e-books/ejournals/ e-articles on the online database. In both the cases, the content received by the user remains the same i.e. books, journals and articles in an electronic format. 8. The Ld. Counsel for the assessee further submitted that, the assessee receipts from Indian customers of the online database/and purchase of ebooks, e-journals and e-articles on the database are not taxable as royalty since the receipts are not for the use of any copyright or for use of any information concerning scientific experience as per Article 12 (4) of the India Netherlands Tax Treaty. By relying on the various case laws, submitted that the addition made by the Department is deserves to be deleted. 9. On the other hand, the Ld. DR submitted that the services rendered by the assessee are 'Technical' in nature ....
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....ssing the data to be in the nature of royalty. The Authority for Advance Ruling after dealing with the issue ultimately concluded that the subscription received by Dun & Brad Street Espana, S.A., for allowing access to the database is Elsevier Information Systems GmbH not in the nature of royalty/fees for technical services. Following the aforesaid decision, the Tribunal, Ahmedabad Bench, in ITO v/s Cedilla Healthcare Ltd. [2017] 77 taxmann.com 309, while considering the nature of subscription paid to a U.S. based company viz. Chemical Abstract Services, which is in the same line of business and is stated to be the competitor of the assessee, held that the subscription paid for online access to the database system "scifinder" is not in the nature of royalty. The observations of the Tribunal while deciding the issue in favour of the assessee are as under:- "17. We find that as the treaty provision unambiguously requires, it is only when the use is of the copyright that the taxability can be triggered in the source country. In the present case, the payment is for the use of copyrighted material rather than for the use of copyright. The distinction between the copyright and copyrig....
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.... structured manner in the database to make it more user friendly and beneficial to the users/customers who want to access the database. The assessee has neither employed any technical/skilled person to provide any managerial or technical service nor there is any direct interaction between the customer/user of the database and the Elsevier Information Systems GmbH employees of the assessee. The customer/user is allowed access to the online database through various search engines provided through internet connection. There is no material on record to demonstrate that while providing access to the database there is any human intervention. As held by the Hon'ble Supreme Court in CIT v/s Bharati Cellular Ltd., [2010] 193 taxman 97 (SC) and DIT v/s A.P. Moller Maersk A.S., [2017] 392 ITR 186 (SC), for providing technical / managerial service human intervention is a sin qua non. Further, Article-12(4) of India- Germany Tax Treaty provides that payment for the service of managerial, technical or consultancy nature including the provisions of services by technical or other personnel can be termed as fees for technical services. None of the features of fees for technical services as prov....