TaxTMI 
TaxTMI 
2023 (7) TMI 1089
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....on 263 is liable to be quashed. Ground No. 2 On the facts and in the circumstances of the case and in law, the Ld. CIT erred in exercising his jurisdiction for initiating proceedings under section 263 of the Act, without appreciating that the Ld. AO had passed the assessment order after making due enquiries and verification of records and hence the said order is not erroneous and/or prejudicial to the interest of the revenue. The Appellant prays that the order passed under section 263 is not in consonance with the law laid down by the Act and hence liable to be quashed. Ground No. 3 On the facts and in the circumstances of the case and in law, the Ld. CIT erred in initiating proceedings under section 263 of the Act, without appreciating that the Ld. AO was correct in accepting the claim made by the Appellant in the return of income. The Appellant prays that the order passed under section 263 is liable to be quashed. Ground No. 4 Without prejudice to the grounds above, the Ld. CIT erred in directing the Ld. AO to make an addition of the subscription receipts of INR 5,56,79,800 received from its Indian customers ....
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....IS") under section 9(1)(vii) of the Act and Article 12 of India-USA DTAA. Since the facts for AY 2017-18 are identical, why action under section 263 of the Act be not taken. 3.3 The assessee responded to the above SCN. It contended that Section 263 cannot be invoked for a mere change of opinion; that the receipts in respect of services would not qualify as FTS/FIS under Article 12(4) of India- USA DTAA as these are not technical services; that the services are standard facility only; thus the services do not satisfy the criterion of the 'make available' condition laid down under Article 12(4) of India-USA DTAA. It was also submitted that the DTAA provisions being more beneficial to it, the assessee adopted the source rule under India-USA DTAA to decide the taxability of FTS. 3.4 The contentions / submissions of the assessee were not acceptable to the Ld. CIT as according to him the assessment order was passed without conducting enquiry relevant to ascertain the facts and the taxability of the income. Therefore, the assessment order is erroneous being prejudicial to the interest of Revenue. 3.5 The Ld. CIT examined the merits of the case on the aspect of taxability of servi....
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....r to section 9(1)(vii) of the Act. In the assessee's case, however the applicable treaty is Indo-US Tax Treaty wherein the benefit of 'make available' clause is there and at no point of time it can be alleged that any kind of know-how or knowledge has been made available to the other party. 5.3 Lastly, the Ld. AR brought to our notice that the assessment orders for subsequent AY(s) referred to by the Ld. CIT have been reversed by the Tribunal holding that no portion of the subscription fees received by the assessee for the access granted to its database can be taxed as FTS. Copy of ITAT order in ITA No. 1877/Del/2022 for AY 2018-19 and in ITA No. 1876/Del/2022 for AY 2019-20 rendered on 05.04.2023 was submitted which has been placed on record. 6. The Ld. DR supported the order of the Ld. CIT. He submitted that the assessee is not just providing a routine or standard facility. The on-line services provided by the assessee themselves make available highly specialised and technical content in the form of solutions, knowledge, experience, skill, know-how and processes. Therefore, the services rendered by the assessee are covered under Article 12(4)(b) of India USA DTAA as well as....
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..../e-articles on the online data base. In both the cases, the content received by the user remains the same that is books, journal and articles in an electronic format. 12. The assessee is a part of Elsevier Group and in case of other group entities on the similar issue of access/subscription to web-site, the ITAT Tribunal of Mumbai Bench in the case of Elsevier Information Systems GmbH Vs. Dy. Commissioner of Income Tax (IT) in ITA No. 1683/Mum/2015, dealing with the similar issue for the Assessment Year 2011-12 held as under:- "15. A customer/subscriber can access the data stored in the database by paying subscription. The Department held the subscription paid to Dun & Brad Street Espana, S.A., for accessing 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 considerin....
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....n that the facts are almost identical and akin. In the referred cases the assessees were also maintaining databases of information collated from various journals and articles and allowed access to the users to use such material as required by them. Keeping in view the ratio laid down in the decisions (supra), the payment received by the assessee has to be held to have been received for use of copyrighted article rather than for use of or right to use of copyright. 17. Having held so, the next issue which arises for consideration is, whether the subscription fee can be treated as fees for technical services. As discussed earlier, it is evident that the assessee has collated data from various journals and articles and put them in a 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 ....