TaxTMI 
TaxTMI 
2025 (6) TMI 63
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....rred by limitation in terms of Section 153 of the Act and hence, void ab initio. 3. That, on the facts and circumstances of the case, the Assessing Officer erred in failing to appreciate that this Hon'ble Tribunal, vide Order dated 21.08.2024 in the Appellant's own case for Assessment Years 2020-21 and 2021-22 (bearing ITA No. 2416/D/2023 and 3646/D/2023 respectively), has categorically held that the amount received by the Appellant from Indian customers does not qualify as Fees for Included Services under Article 12(4) of the India-US Double Taxation Avoidance Agreement ('India-US tax treaty'). 4. That, on the facts and circumstances of the case, the AO and DRP erred in holding that consideration of Rs. 89,28,61,219/- received by the Appellant from enterprise customers constitutes fee for technical services under the Act and the India-US tax treaty. 5. That on the facts and circumstances of the AO and DRP appreciating that the Appellant provided standard facility without human intervention to customers in the form educational consideration thereof could not be treated as technical services under the Act or fee for included services under ....
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.... on the basis of CASS. During the scrutiny assessment the AO noted that the assessee has earned gross receipt of Rs. 156,00,36,258/- from India comprising of the receipts from individual customers as well as enterprise customers. The AO issued a show cause notice to the assessee that in view of the factual matrix remains same as for the Assessment Year 2020-21 and 2021-22 and therefore, as to why the entire receipts from India should not be considered information consisting industrial, commercial or scientific experience and consequently a royalty both under the act as well as under India-USA DTAA. Alternatively, the AO also asked the assessee to show cause as to why the receipts should not be considered as fee for technical services under the Act as well as DTAA. The assessee filed its reply and explained that the services provided by the assessee is only online learning platform that offers anyone anywhere access to online courses from universities and companies, therefore, the payment received by the assessee against providing the online courses in various disciplined does not fall in the ambit of royalty or fee for included services as per India-USA DTAA. The AO did not accept ....
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....ix in your case remains the same with respect to the AY 20-21 and AY21-22. Consequently, you are requested to show cause as to why the entire receipts from India should not be considered as consideration for information concerning industrial, commercial or scientific experience, and therefore considered as royalty, both under the Act as well as the DTAA. Further, you are required to show cause as to why, on a without prejudice basis, the receipts should not be considered as fee for technical services under the Act as well as the DTAA." 8. In response to this show cause notice the assessee filed reply dated 24.02.2024 but the AO did not accept the reply of the assessee and opined in para 7 to 14 of the draft assessment order as under: "7. It is pertinent to mention that in the case of the assessee, a Final Assessment Orders have been passed on 28.06.2023 and 31.10.2023 for the A.Y. 2020-21 and 2021-22 respectively holding the gross receipts of the assessee in the nature of FTS/FIS. Further, since the factual matrix is identical in the instant case too, it is thus important to bring out the findings of the AO for assessee's case in the AY 20-21. In v....
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....ser Services" and "Content Services" have been mentioned in the agreements entered into with University of Petroleum and Energy Studies, and Manipal Global Education Services Pvt. Ltd., as provided by the assessee. Further, the Annex 1 of the agreement with Gandhi Institute of Technology and Management, also provides the following set of services to be provided by Coursera. 8.5 From the perusal of the above Set of Services and the statement of HR Manager, it is amply clear that the assessee is not merely providing content services to the customers in India but is also providing a whole range of "User Services" which are user specific, which involve a high degree of human intervention. It is also important to note that there is no separate consideration for such user services to Coursera. It is thus clear that Coursera provides customized services to its clients. 8.6 In view of the observations made above, the contention of the assessee that the services provided by it are automated and do not involve any human intervention, is hereby rejected. It is amply clear that the services provided by the assessee (Content services and User services) are technical in nature ....
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.... only for teaching in or by educational institutions. In the instant case, the assessee is not an educational institution but a service provider which is hosting content services and is providing user services in relation to courses developed by other educational institutions. The completion certificate issued to the learners bears the logo of both, the educational institution and the assessee. Since the assessee is not an educational institution itself, it does not fall within the ambit of the exclusionary provisions of Article 12(5) of the India-USA DTAA. Further, the contention of the assessee falls outside the purview of FIS under Article 12(5) of India-US tax treaty as it constitutes consideration for teaching in or by educational institutions' is not acceptable. The assessee has submitted that Coursera is a US based company and is engaged in the business of facilitating education through online medium i.e. through website, mobile apps and Catalog API. From the submissions of the assessee, it is clear that the Coursera is not an Educational Institution rather an aggregation service provider which brings educational institutions & learners on one platform ....
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....ions across the globe, even if they are not resident of USA, merely because the aggregator on whose platform their courses are being provided happens to be a US entity. 8.12. In view of the above, the contention of the assessee that it falls under the provisions of Article 12(5) of the India-USA DTAA is hereby rejected. The receipts from customers in India are therefore treated as FTS / FIS, both under the provisions of the Act, as well as the India-USA DTAA. TRAINING ELEMENT IN PROVISIONING OF SERVICES 9. Also, it is being highlighted that in this instant case as verified in AY 2020-21, a training element is also involved. With respect to the content providers, the assessee is providing training. It is being observed that no content can be onboarded without the training being given by the assessee about the features of that platform on how to use the platform for various functions and utilities. It is being noted that since it is part of the entire organic thing, no business can be generated without a content provider getting onboard. Onboarding of the content provider is part and parcel of the commercial existence of the assessee. To verify the same, th....
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....ly of ISB Hyderabad shows that the personnel of the assessee do guide and help in onboarding of the content provider. From her Linkedin profile, it was seen that Ms. Alexandra Urban is Principal Learning Design consultant in Coursera. Further emails exchanges/ digital communication evidence were asked from the assessee vide notice u/s 142(1), but assessee failed to provide email exchanges with the content providers. But, the above observations highlight that the training component is definitely involved in respect to the enterprise customers and content provider. Also, the Indian AE of the assessee i.e. Coursera India Pvt. Ltd., is engaged in marketing and support services in relation to the service delivery to customers of the assessee. Also, the User services are being provided to all the customers of the assessee as highlighted on the above paras. 9.4 From the perusal of the above, it is amply clear that the assessee is not merely providing content services to the customers in India but is also providing a whole range of "User Services" which involve a high degree of human intervention. It is also important to note that there is no separate consideration for su....
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.... u/s 270A of the IT Act, 1961. 13. Hence, total income of the assessee is computed as under:- Income as per ITR NIL Add: Addition as per Para 11 above Rs. 89,28,61,219/- Assessed Income Rs. 89,28,61,219/- 14. Accordingly, proposed to be assessed at total income of Rs. 89,28,61,219/- and taxed accordingly as per Income Tax Act, 1961, Charge interest as per Act. Cess and surcharge to be charged as applicable. Credit for prepaid taxes is to be allowed after verification on account of income offered for taxation. Detailed computation of tax payable and interest chargeable as per provision of law will be made in ITNS-150 as part of final order. Demand Notice u/s 156 of the Act & penalty notice u/s 270A of the Act will be issued with the final order." 9. The assessee filed objections against the draft assessment order before the DRP. The DRP while passing the directions under Section 144C(5)of the Act has taken note of the fact about the identical issue involved for the Assessment Year 2020-21 and 2021-22 and decision of this Tribunal deciding this issue in favour of the assessee but confirmed the finding of the AO in draft assessment order in parag....
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.... customers. (iii) The Panel agrees with the observation in the draft order that there is an element of training involved with respect to the customers which has been further verified on the basis of the information received u/s 133(6) of the Act. When a corporate avails services of the assessee company, it does so to impart training and upgrade the skills of its employees. Corporates are not NGOs they are profit making organisation that spend money to enhance skills of their employees for enduring benefits it will bring to their organisation post training of the employee. And for the same reason that corporates are not NGOs, they have specific criteria for making these training facilities available to their employees. The employees cannot avail these courses on the basis of their likes and dislikes, instead they can avail it on the basis of its utility to their organisation. This learning has commerce at the centre of it and not personal growth of an individual for personal gains. When an educational institution which is teaching in avails services of the assessee company, it does so as a business just like its business of making other services like food, books, clothing e....
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....ute. e) As per various judicial pronouncements the make available clause will apply only when services have an enduring benefit to the customer which remains with him even after service provider is no longer available. (f) Also as per various judicial pronouncements the services should involve a human driven element. (iv) When assessee company is examined on the basis of above provisions it is found that: a) Coursera is a service provider that is in business of providing material for training of employees/ students of corporates/ educational institutes for profit as : a business concern. The nature of material provided for training is as technical as it can get in field of education. It cannot be compared with the technical aspect in other fields since it would amount to comparing "apples with oranges". The content provided is curated and has specialized studying material including video sessions. They are highly specialized courses for learning at ones own pace. Despite the content / course being the same, the nature of these courses acquires different dimension when it is being taken up by an individual for personal reasons versus when it is ta....
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....d involvement of guidance to the learners through employees for which user charges are being taken by the assessee company prove the human element. In an era of fast digitization and minimal human intervention, the way we define human intervention, has to be recalibrated, for such services. For a 'mortar and brick' human intervention would differ from an 'on line' coaching institute. Here 'video content' and other services provided to aid learning will be the test, (vii) In view of the above there is no infirmity found with the order of the assessing Officer who is directed to pass a well reason speaking final assessment order. The grounds of objection in this regard, are disposed off accordingly." (v) As the issue is identical in the subject AY 2022-23 and the factual matrix also continues to be same for the AY under consideration, the Panel has no reason to deviate from the Earlier Directions of DRP issued for AYs 2020-21 & AY 2021-22. Further, the assessee in its submissions has stated that Hon'ble ITAT has recently passed favorable order in the case of the assessee in the previous years. Without going into much details and particula....
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....aintained its view as taken for the Assessment Years 2020-21 & 2021-22 and consequently rejected the objection of the assessee despite the decision of this Tribunal reversing the finding of the DRP and consequential assessment order for AY: 2020-21 & 2021-22. The reasons assigned by the DRP as well as the AO while passing the final assessment order are that the revenue has not accepted the decision of this Tribunal for Assessment Year 2020-21 & 2021-22 and filed the appeals before the Hon'ble jurisdictional High Court. Now the appeal of the department has been dismissed by the Hon'ble jurisdictional High Court vide its judgment dated 19.05.2025 and upheld the composite order of this Tribunal dated 21.08.2024 in para 13 to 16 as under: "13. As could be seen from the highlighted portion of the observation of Assessing Officer, without properly implementing the directions of learned DRP, he has merely stated that the agreement with Gandhi Institute of Technology and Management has been discussed in the draft assessment order. By these observations what the Assessing Officer implies is, learned DRP has issued directions without proper application of mind. This, in our view, is....
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....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 copyrighted article has been very well pointed out by the decisions of Hon'ble Delhi High Court in the case of DIT v. Nokia Networks ΟΥ [2013] 358 ITR 259/212 Taxman 68/25 taxmann.com 225. In this case all that the assessee gets right is to access the copyrighted material and there is no dispute about. As a matter of fact, the AO righty noted that 'royalty' has been defined as "payment of any kind received as a consideration for the use of, or right to use of, any copyright of literary, artistic or scientific work" and that the expression "literary work", under section 2(o) of the....
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..../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 provided under Article 12(4) of the India- Germany Tax Treaty can be found in the subscription fee received by the assessee. Further, the Department has not brought any material on record to demonstrate that the assessee has employed any skilled personnel having knowledge of chemical industry either to assist in collating articles from journals / magazines which are publicly available or through them the assessee provides instructions to subscribers for accessing the online database. The assessee even does not alter or modify in any manner the articles collated and stored in the database. In the aforesaid view of the matter, the subscription fee received cannot be considered as a fee for t....
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....ies), provide support to Organization for integration with Organization's Leaming Management System (IMS), Including single sign-on; · Skit's Transformation Service: assist Organization to: i plan Organization's curricula across its various institutes and domains; and: A. Integrate Coursera courses into Organization's pedagogy and support program rolout · Private Authoring Tools: Provide Organization's stakeholders with private authoring tools, training on the usage of the Ioces, Coursera's recommended leaming pedagogy and guidelines for best practices; · Pre-Launch Support: partner with the Organization to facilitate a faculty workshop, a student presentation, and assist with the Organization's launch communications with the use of the Coursera marketing kit · Admin Onboarding: help Organization identily Be core admin team, train admins, demo usage reports, schedule check- ins and follow-ups and explain enhanced loamer profile; · Ongoing Engagement and Support: Support the Organization in identifying a "Campus Ambassador" from within the leamer community as "Coursera Champions": grade reports available to faculty/program coordinators; the use of gamif....