TaxTMI 
TaxTMI 
2024 (7) TMI 435
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.... 2. That on the facts and circumstances of the case and in law, the Ld. AO/DRP has erred in treating 'commission1 income, amounting to Rs. 5,31,86,587/-, received by the Appellant from Springer Nature India Private Limited ("SNIPL") [earlier known as Springer India Private Limited ("SIPL")] and "subscription fee" amounting to Rs. 58,39,62,432/- received by the Appellant from third-party end- customers in India on behalf of Springer Nature Group's affiliated publisher entities as fee for technical services ("FTS") both under the provisions of the Act and Article 12 of India-Germany Double Taxation Avoidance Agreement ("DTAA"). 3. That on the facts and circumstances of the case and in law, the Ld. AO/DRP failed to appreciate that the "commission income" and receipts from "subscription fee" are of a different nature and must be treated separately rather than being aggregated and collectively characterized as FTS under the Act and DTAA. 4. That on the facts and circumstances of the case and in law, the Ld. AO/DRP erred in treating the commission income received from SNIPL as "consultancy of technical nature" under the Act and the DTAA without appreciating the ....
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....06/2023 is reproduced hereunder: ".................... 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 aforementioned (first) addition was an amount equivalent to Rs. 1,94,279, which, as per the Form 3CEB report filed by SIPL, was categorized as "service charges" for the sale of "Indian journals in printed form". 4.4 The second addition made by the AO was an amount equivalent to Rs. 16,67,83,110. This amount represented the subscription fees received by the responden....
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....ed 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 promotion, sale and distribution of products globally could be categorised as consultancy services. Likewise, services such as order handling, inventory management, debtor management and subscription management could be categorised as managerial services. 9.2 The services provided by t....
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....(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/assessee, pursuant to its appointment as a Commissionaire, promoted, sold and distributed, print and electronic books and journals published by SIPL. Besides this, under the very same Commissionaire Agreement,....
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....y 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, articulated therein by this Court and other Courts, were examined, and addition made by the CIT(A) in that case were deleted: i) DIT v. Panalfa Autoele....
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.... 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 revenue amount of "any and all" sales commissioned through the intermediary of the respondent/assessee. (See Articl....
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....g special skills or knowledge, excluding fields such as art, or human sciences. 21.1 Likewise, consultancy services involve rendering professional advice or service in a specialized field. 22. Once again, there is no reference to any special skill or knowledge that the respondent/assessee personnel brought to bear in rendering the services encapsulated in the Commissionaire Agreement. Promotion, sale, or distribution of SIPL's publications, or rendering support services of the nature referred to in Article 3 of the Commissionaire Agreement, although involving human intervention, do not, in our view, fall in the category of technical and/or consultancy services. There were no special skills or knowledge that the respondent/assessee's personnel were required to possess to render the services that were contemplated under the Commissionaire Agreement. The respondent/assessee also did not render any professional advice, or service concerning a specialized field. As indicated above, for a service to be categorized as a technical service, it had to be concerned with applied science, i.e., using scientific knowledge for practical applications, or industrial scienc....