TaxTMI 
TaxTMI 
2023 (7) TMI 618
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....h was initially processed under Section 143(1) of the Income Tax Act, 1961 [in short, "Act"]. 3.1 The ROI was, however, picked up for scrutiny and accordingly, notice dated 20.08.2015, issued under Section 143(2) of the Act, was served on the respondent/assessee. 4. The Assessing Officer (AO), via order dated 04.05.2016, passed under Section 143(3) read with Section 144C(3)(a) of the Act, made three additions to the income of the respondent/assessee. 4.1 The first addition concerned an amount equivalent to Rs. 24,84,114 paid to the respondent/assessee by an Indian entity, namely, Springer India Pvt. Ltd. (in short, "SIPL"), against a Commissionaire Agreement. This addition consisted of two components. 4.2 The first component constituted a commission fee, amounting to Rs. 22,89,835. This payment, it appears, had been classified in the Form 3CEB report filed by SIPL as "production and editorial charges". The respondent/assessee's stand before the statutory authorities was that although this payment had been inadvertently classified as production and editorial charges, it was nothing but commission received against services rendered. 4.3 The second component of the afor....
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...., the Tribunal relied upon a decision of its coordinate bench dated 23.08.2022, passed in ITA Nos. 434 and 3826/DEL/2019 in the matter of Springer Verlag GmbH v DCIT. This decision of the Tribunal concerned AY 2014-15 and AY 2015-16. 6.1 Insofar as the second addition is concerned, the Tribunal allowed the objection raised by the respondent/assessee, that the subscription fee could not be treated as royalty. Insofar as this aspect was concerned, the Tribunal followed the decision of the Supreme Court rendered in Engineering Analysis Center of Excellence (P.) Ltd. v CIT, [2021] 432 ITR 471 (SC). 7. It is against this backdrop that the appellant/revenue has preferred the instant appeal. Submissions of Counsel 8. Arguments in support of the appeal, on behalf of the appellant/revenue, were advanced by Mr. Ruchir Bhatia, learned Senior Standing Counsel, while Mr. Himanshu Sinha made submissions on behalf of the respondent/assessee. 9. Broadly, the arguments advanced by Mr. Bhatia can be paraphrased as follows: 9.1 The addition of Rs. 22,89,835/- sustained by the CIT(A) as FTS was tenable, having regard to the terms of the Commissionaire Agreement. The services such as ....
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....ers, in addition to those referred to above: i) GVK Industries Ltd. v. Income Tax Officer, [2015] 371 ITR 453 (SC) ii) In re: Wallace Pharmaceuticals P. Ltd., [2005] 278 ITR 97 (AAR) iii) Device Driven (India) (P.) Ltd. v. CIT, [2021] 126 taxmann.com 25 (Kerala) 12. Mr Himanshu Sinha, on the other hand, while resisting the admission of the appeal, adverted to the following: 12.1 The respondent/assessee, which is a German company, was part of Springer Science + Business Media Group [in short, "The Springer Group"] during the period under consideration. The Springer Group was engaged in the business of publishing books, and academic journals, in the field of natural sciences, technology and medicine. 12.2 As part of the Springer Group's business model, the respondent/assessee functioned as a non-exclusive sales representative globally, except in the Americas, of the Springer Group's affiliated publisher entities, which included SIPL. The Commissionaire Agreement executed between the respondent/assessee and SIPL captured the functions performed by the respondent/assessee as part of the Springer Group. 12.3 Accordingly, the respondent/asse....
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....a service to be construed as a technical service, it should involve the application of some special skill or knowledge concerning the technical field. 13.4 Consultancy service involves offering advice, or extending advisory services by a professional, although there could be an overlap between technical and consultancy services. In some cases, consultancy services may involve entering a technical field. There are also cases where consultancy services involve rendering advice, with or without expertise in technology. 13.5 Mr Sinha argued that the remit of the respondent/assessee was to further sales and to promote and distribute books published by SIPL, in electronic form or otherwise. Besides this, the respondent/assessee also rendered support services for business operations. Thus, none of the services offered by the respondent/assessee involved an element of technical expertise or advice. Therefore, the services rendered by the respondent/assessee could not be characterised as FTS under the DTAA, or the Act. 13.6 Further, Mr Sinha submitted that the Tribunal rightly relied upon its decision in the Springer Verlagh case, wherein the following decisions and principles, art....
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....s Agreement." 15.4 Therefore, for the consideration received by the respondent/assessee against services rendered as per the Commissionaire Agreement to be construed as FTS, the services would have to fall under one or more categories mentioned above, i.e., managerial, technical or consultancy services. 16. Admittedly, even according to the appellant/revenue, the respondent/assessee, under the Commissionaire Agreement, was required to promote, sell and distribute books and journals published by SIPL in print and electronic form. Besides this, something which is not disputed by the appellant/revenue, the following services were rendered by the respondent/assessee: (i) Global sales and marketing services (ii) Customer services (iii) Order-handling (iv) Address maintenance (v) Stock keeping and inventory management (vi) Invoicing (vii) Delivery (physical as well as online) (viii) Debtor management services (ix) Subscription management (x) Return copies processing 17. For rendering the aforementioned services, the respondent/assessee was paid a commission, at the rate of 9.9%, on the net ....
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....ience, i.e., using scientific knowledge for practical applications, or industrial science concerning, relating to or derived from industry. 23. Therefore, the contention of Mr Bhatia that on account of there being human intervention, the services rendered by the respondent/assessee should be considered as technical services, is a submission, which according to us, is completely misconceived. 24. Given this position, we are not inclined to interfere with the decision arrived at by the Tribunal concerning the deletion of the addition made amounting to Rs. 22,89,835, on account of commission received by the respondent/assessee. The CIT(A)'s conclusion that the said amount received by the respondent/assessee had attributes of FTS was, in our view, erroneous. 24.1 The attributes of what constitutes FTS has been dealt with extensively by the coordinate bench decision of this Court in DIT v. Panalfa Autoelektrik Ltd. In this judgment, the coordinate bench has dealt with the order of the Authority for Advance Ruling (AAR) rendered in Wallace Pharmaceuticals (P.) Ltd. The attempt of Mr Bhatia to distinguish the judgment in DIT v. Panalfa Autoelektrik Ltd. must fail, as it misse....