TaxTMI 
TaxTMI 
2025 (10) TMI 424
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....her the Learned AO was justified in taxing the receipts of Rs 5,89,73,412/- as Fee for Technical Services (FTS) in the facts and circumstances of the instant case. 4. Both the parties before us fairly stated that the issue in dispute is squarely covered by the decision of this Tribunal in assessee's own case for the Assessment Year 2021-22 in ITA NO. 3626/Del/2023 dated 14-11-2024 and the same agreements are continuing in the year under consideration. For the sake of convenience, the order passed by this Tribunal for the Assessment Year 2021-22 referred supra are reproduced hereunder:- "4. We have heard the rival submissions and perused the materials available on record. DigiCert, Inc. (hereinafter referred to as 'DigiCert, Inc.' or 'the assessee or 'the Company') was incorporated on 10 April 2003. The Company is a USA technology based global company focused on digital security. The Company provides public key infrastructure and validation required for issuing digital certificates or TLS/SSL certificates. These certificates are used to verify and authenticate the identities of organizations and domains and to protect the privacy and data integrity of....
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....A 1,20,931 Yes 7 Postiefs Technologies Private Limited CHEP16859D 21,(XX) Yes 8 JNR Management Resources Private Limited DEU07442B 6,00,01,500 Yes 9 MIQ Digital India Private Limited DELM20833B 1,27,999 Yes 10 Peoplestrong Technologies Private Limited DELP12063C 1,24,017 Yes 11 Cyient Limited HYDICKJ294A 55,300 Yes 12 Adweb Technologies Private Limited MUMA46144A 4,78,20,187 Yes 13 BFC Forex ft Financial Services Pvt Ltd MUM B17091E 34,027 Yes 14 Ge Oil ft Gas India Private Limited MUMG10927A 1,48,967 Yes 15 NCDEX E Markets Limited MUMN14313F 56,534 Yes Total 10,89,13,249 7. Out of the above receipts, 99.16% of the receipts were from JNR Management Resources Pvt Ltd, Adweb Technologies Pvt Ltd and Safe Cyber Solutions & Services Pvt Ltd, which are governed by Master Reseller Agreement enclosed in Pages 1038 to 1047 of Vol. III of the Paper Book. The relevant clauses of the said agreement are reproduced below for the sake of convenience:- "This Master Reseller Agreement (the "Agreement") is between DigiCert, In....
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....Services may be updated, upgraded, or revised from time to time in DigiCert's sole discretion. "Certificate Application" means a request to DigiCert for the issuance of Certificates. "Territory" is worldwide (subject to the exclusions set forth in Section 14), unless stated otherwise in an Addendum or amendment referencing this Agreement executed in writing between Reseller and DigiCert. 2. APPOINTMENT Subject to the terms and conditions of this Agreement, DigiCert hereby appoints Reseller as a non-exclusive reseller for the Services. Reseller may promote, market, and resell Services to end user customers (each such customer to whom Reseller resells Services, the "Reseller Customers") in the Territory. 3. RESELLER OBLIGATIONS 3.1 Resale Process. 3.1.1 Reseller may purchase Services for resale to Reseller Customers. If Reseller wishes to enroll for Services on behalf of Reseller Customers, Reseller shall enter into an agreement with such Reseller Customers (each, a "Customer Agreement"), which (a) binds the Reseller Customers to the Subscriber Agreement applicable to the Services, as specified by DigiCert and publish....
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....er shall not receive any credit or refund thereof. Upon issuance, each Service is applicable valid for its validity period unless earlier revoked pursuant to this Agreement, including under Section 3.3.3 below. In no event shall Reseller permit Reseller Customers to resell the Services. 3.2 Marketing. Reseller shall use commercially reasonable efforts to market and promote use of the Services. Reseller shall be responsible for being knowledgeable about the Services, including the technical aspects and language related thereto, and Reseller shall cause Reseller appropriate employees to participate in any technical, sales and service training with respect to the Services as required by DigiCert from time to time. 3.3 Support 3.3.1 First-Tier Support. Reseller shall provide Reseller Customers with first-tier support including, but not limited to, resolution of presales questions, setup, onboarding, integration, and post-sale inquiries, basic integration support, problem screening, and basic diagnostics. 3.3.2 Renewal. Reseller shall use commercially reasonable efforts to send renewal notices to Reseller Customers at least thirty (30) days prior to e....
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....epartment's Office of Fore Asset Control list of "specially described party on the United States Treasury Dee United States Commerce Department's "denied parties list" or the United States Commerce Department's "BIS Entity List". 4. DIGICERT'S OBLIGATIONS 4.1 Ordering and/or Deploying Services. If Reseller enrolls for Services on behalf of Reseller Customers, then DigiCert shall email deployment Reseller enrolls for Se Digicert's authentication of the applicable Certificate Application. Alternatively, if Reseller Reseller upon DigiCservices through DigiCert's URL, then DigiCert shall email deployment instructions director Reseller Customers upon DigiCert's authentication of the applicable Certificate Application. 4.2 Service Notices. DigiCert shall use commercially reasonable efforts to notify Reseller and/or Reseller Customers of the expiration of any Services at least thirty (30) days prior to the expiration. 4.3 Support. DigiCert shall provide support as follows: (a) standard phone and email support during normal business hours Monday through Friday exchange signated holidays), (b) within twenty-four (24) hours of r....
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....wnership or license in and to the other party's Intellectual Property Rights, and each party shall continue to independently own and maintain its Intellectual Property Rights." 8. On perusal of the aforesaid clauses, we find that the relevant clause would be clause 8.1 containing the caption "Copyright License for Sales and Marketing Materials. It says that DigiCert grants reseller a nonexclusive, non-transferable, non-sub-licensable right and license during the term of this agreement to (a) use the DigiCert materials during the term of this agreement solely in conjunction with the marketing, promotion and resale of the services and (b) modify certain DigiCert materials expressly designated for such purpose by incorporating reseller trademarks and/or brand features which is nothing but the reseller branding in a manner consistent with DigiCert brand guidelines. 9. Similarly, in respect of Master Supplier Agreement entered into with DXC Technology India Private Limited, which is enclosed in pages 632 to 666 of Vol. II of the Paper Book, the relevant clause number 5 under the caption "Licenses to Materials" also contain the same clause. Further, the relevant cla....
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....t and does not create any interest in copyright and therefore, the payment for such a license would not be in the nature of either royalty (1:25) or fee for technical services. We find that assessee had also placed on record the Addendum to Master Reseller Agreement with the main parties which had contributed 99 percent of the receipts to the assessee. This addendum is enclosed in pages 996 to 1001 of Vol. III of the Paper Book. The assessee had also furnished the invoices raised on JNR management resources private limited which are enclosed in pages 518 to 522 of Vol. II of the Paper Book which clearly says what is being charged by the assessee is for reseller bulk digital certificate purchase. These invoices clearly show that no technical services within the ambit of fee for technical services both as per the Act as well as under the treaty were rendered by the assessee. Similarly, the assessee had enclosed the invoices from pages 535 to 547 of Vol. II of the Paper Book in respect of Adweb Technologies private limited whose invoices also carry the same description as that of JNR above. 12. We find that assessee had rendered level 1 services to the Indian customers and le....
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....ute 0.11% of the total receipts. Therefore, the learned AO erred in concluding that the whole receipts of the assessee would fall under the same category of technical services, ignoring the fact that 99 percent of the receipts were from two major parties with whom assessee had merely entered reseller agreement without having any provision for technical services. In these circumstances, classifying the whole receipt as FTS merely by relying on the particular clause of the agreement with DXC Technology India Private Limited would be grossly unjustified. Now, even if the relevant clause mentioned in DXC Technology agreement could be construed as technical services so as to make it taxable under the Act, the same whether would become taxable as per Article 12 of India US treaty is to be seen. In this regard, Article 12 of India US treaty defines fee for technical services and it insists that unless the technical services rendered result in "making available" technological support, technology, technical plan or design etc., only then the said services could be construed as fee for technical services so as to be taxable under the India US treaty. In the instant case, nowhere the lower au....