TaxTMI 
TaxTMI 
2025 (6) TMI 63
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 the India-US tax treaty. 6. That on the facts and circumstances of the case ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....- 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 this contention of the assessee and opined that for the Assessment Year 2020-21 & 2021- 22 an identical issue has been decided by c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....om 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 view of the above, the relevant extract of the assessment order of AY 20- 21 is being reproduced as below:- "... 8.2 The assessee has further contested that for services that ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 and there is human intervention involved in the rendering of these services. In view of the same, the consideration received for such services is held to be FTS / F/S both under the Act, as well as the India-USA DTAA. 8.7 Even though the course conten....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he 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 by using special cutting-edge technology and services. The assessee has also stated that receipts from students through the educational institutions constitute 'consideration for services for the personal use of the individual or individuals making the payments' which is excluded from the scope of FIS under India- US t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ia 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, third party enquiries were undertaken. THIRD PARTY ENQUIRIES 9.1 Enquiries done with the Customers/ clients: It was seen from the third part enquiries undertaken by issuing notices u/s 133(6). One such client of the assessee- M/s Ashok Leyland furnished following responses. In case of M/s Tata Service Limited, the reply of 133(6) was seen. Whom did you contact in contact....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nitely 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 such user services to Coursera. Also, there is an element of training involved with respect to both customers and the clients as observed from the perusal of the 133(6) replies. This further satisfies the 'make available' test for constituting such receipts as FIS under the India-USA DTAA. 9.5 In light of above observations, the gross receipts of the assessee is being charged as per Article 12(4) of India- USA DTAA for rendering technical services to the customers through their platform and makin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 paragraph 6 & 7 as under: "6. Directions of DRP: (i) Ground of objection number 1 is general in nature hence not required any specific adjudication. (ii) Ground of objection number 2, 2.1 & 2.2 are inter-related and the basic issue involved is addition of receipts from educational institutions, and corporate customers as Fee for Technical Services/Fee for included Services under Article 12 of the India-US DTAA. (iii) The Panel has considered the rival averments as mentioned above. It is observed that it is a legacy issue as this case came before the Panel in AY 2020- 21 and AY 2021-2....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 etc. In its institute it is already teaching its students, as per their curriculum, what they need to learn. What comes by way of Coursera to the students is the training they receive that aids their course content in the educational institute. Students when avail such courses it is as per the need that the educational institute identifies, and often educational institutes mark its students on the basis of their completion/ performance at such courses. This is not the same as a person sitting at home, taking subscription of the course from Coursera, at individual level, for personal growth. It is about business of seeking courses for s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....red 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 taken up by a corporate / educational institute for commercial reasons. b) Coursera charges user fee @30% for the user services it provides for the course content which requires use of work force working remotely online for ease of c) The services that coursera provides (out of the 7 mentioned attributes above in 4(b) of Article 12 of India US DTAA) imparts skill to the employee of corporate houses and student of the educational institute. It is not as if a Microsoft Subscription on excel has been given for the users to work upon. Nature of all businesses differ hence 'one size fits all' cannot be used for all businesses. What is 'make available' differ with nature of business. In case of assessee company if we interpre....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Y 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 particulars of the case, the DRP is of the view that it shall not deviate from its earlier stand made for the previous years. However, without deviating from the earlier direction, the Panel for the AY under consideration is of the view that the need of the next line of action is that the office of the AO must verify the assessee's claim in terms of acceptance or otherwise of the Hon'ble Tribunal's impugned order and to complete the assessment keeping in view the department's stand on acceptance of the Hon'ble Tribunal's impugned order or preferring the litigation against Hon'ble Tribunal's impugned order. As a result the draft order passed by the AO is upheld, the AO is directed to pass a well reasoned speaking final order. The assessee has stated in ground of o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y 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 highly objectionable and against the provision contained under section 144C(13) of the Act. 14. Be that as it may, Assessing Officer's findings/observations on the role of assessee are self-contradictory. While on one hand, the Assessing Officer has acknowledged the fact that the assessee is an aggregation service provider and not a content creator, in the same breath, he says that assessee's contention that it is a mere aggregator of educational courses is not correct. The Assessing Officer has not brought on record any material to establish the fact that the assessee provides technical services through its online platform. Merely because the assessee has a customized landing page, it does not mean that the assessee provides technical services, that too, through human intervention. The Assessing Officer, in our view, has not been able to prove s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s 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 Copyright Act, includes 'literary database' but then he fell in error of reasoning inasmuch as the payment was not for use of copyright of literary database but only for access to the literary database under limited non exclusive and non transferable licence. Even during the course of hearing before us, learned Departmental Representative could not demonstrate as to how there was use of copyright. In our considered view, it was simply a case of copyrighted material and therefore the impugned payments cannot be treated as royalty payments. This view is also supported by Hon'ble Bombay High Court's judgment in the case of DIT (International Taxation) v. Dun & Bradstreet Information Services India (P.) Ltd. 16. The same view was again expressed by the Tribunal in DCIT v/s Welspun Corporation Ltd., [2017] 77 taxmann.com 165. If we examine the facts of the presen....