TaxTMI 
TaxTMI 
2025 (2) TMI 1268
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....INR 17,860,030, making an addition of INR 174,865,171, pursuant to the directions issued by the Dispute Resolution Panel ('DRP"). 2 That on the facts and in circumstances of the case and in law, the AO / DRP have erred in holding the Revenues amounting to INR 174,865,171 earned by the Appellant for sale of online journals or books constitutes royalty under the provisions of section 9(1)(vi) of the Act read with Article 12 of India-USA tax treaty. 2.1. That on the facts and in circumstances of the case and in law, the AO / DRP have erred in holding that the Appellant's receipts were for use or right to use copyright of artistic, literary or scientific work. 3. That on the facts and in circumstances of the case and in law, the AO / DRP have erred in holding the Revenues amounting to INR 174,865,171 earned by the Appellant for sale of online journals or books constitutes fees for technical services ("FTS") / Fees for Included Services ("FIS") under section 9(1)(vii) of the Act read with Article 12 of India-USA tax treaty. 3.1. That on the facts and in circumstances of the case and in law, the AO / DRP have failed to appreciate that receipts ....
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....United States of America and a tax resident and engaged in the business of providing access to online journals/online library, containing Wiley Blackwell Journals ("WB Journals"), publications, distribution of WB Journals, online books, etc. The assessee online Library provides access to over 7.5 million articles, reference works, laboratory protocols and databases. During the year, the assessee entered into agreements from outside of India with customers in India to provide access to online journals/online library available at its online database maintained outside of India and earned revenue amounting to Rs.17,48,65,171/- in consideration for sales or providing access to online databases / journals etc. to Indian customer from outside of India. 4.1. The assessee filed its return of income on 08.03.2022, declaring taxable income of Rs.1,78,60,030/- and claiming of receipts of Rs.17,48,65,171/- as not chargeable to tax as Royalty / FTS/FIS under the provisions of the Act read with the India-US DTAA. 5. During the draft assessment proceedings, the Assessing Officer asked the assessee vide show-cause noticed 02.12.2022 to explain as to whether there was any difference/change in....
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....in India for sale of print and online journals / books etc. In respect of print journals/ books, these are shipped physically from overseas to customers in India. However, in respect of online journals etc. the customers are provided access to online journals / online library available at Wiley's online database outside of India. The assessee earns sale / subscription revenues from the sale of print / online journals etc. The articles / literature comprising the online journals/library are not developed and owned by the assessee and the assessee only compiles/organizes the content obtained from various authors in a structured and easily comprehendible format and provides access thereof to customers/subscribers. As against the conclusions drawn by your goodself in assessment for AY 2020-21, it is respectfully submitted that the receipts from Indian customers from sale of online journals do not constitute consideration for the use or right to use of any copyright etc. Further, the receipts are not in consideration of making available any technical knowledge / skill etc. to the customers. Accordingly, receipts from Indian customers are neither taxable as royalty nor as fe....
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.... initiating penalty proceedings u/s 270A of the Act. This ground of objection is rejected being 3/consequential and premature in nature." 8. Against the said order, the assessee is in appeal before us. 9. At the outset, the ld. AR submitted that the issue in dispute is squarely covered in assessee's favour by the order dated 21.08.2024 of the Tribunal in assessee's own case in ITA No.2344/Del/2023, Assessment Year 2020-21. 10. The Ld. DR relied upon the orders of the authorities below. 11. We have considered the rival submissions and perused the materials available on record. On perusal of the Dispute Resolution Panel directions for the present assessment year in para 4, it is seen that while agreeing with the findings of the Assessing Officer, the DRP has followed its finding for AY 2018-19, 2019-20 and 2020-21. On similar facts, the Co-ordinate Bench of the Tribunal in the aforesaid order for AY 2020-21 in assessee's own case held that similar receipts were not taxable as it was not in the nature of Royalty/FTS under Article 12 of the India USA DTAA. The relevant extract of the order is reproduced hereunder:- 10. Heard the arguments of both the parties and pe....
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....on of the books/journals/articles can be purchased it on line by paying the price of the book and in so far as the frequent customers of the books/journals /articles available on Lexis Nexis can opt to subscribe data base for certain period which allows the customers to access the e-books/e-journals/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 & ....
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....338 ITR 95/[2012] 20 taxmann.com 695." 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 present appeal in juxtaposition to the facts of the decisions referred to herein before, it can be seen 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....
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....India as the assessee has no permanent establishment in India. By respectfully following the ratio laid down by the Mumbai Tribunal in the case of Elsevier Information System GmbH (supra), in the absence of any material available on record to prove that the assessee is providing full fledged service and solutions for legal professions, we are of the opinion that the A.O. has committed an error in making the addition. In view of the same, the payment received by the assessee is in the nature of 'Business Profit' which cannot be brought to tax in India in the absence of PE. Accordingly, the grounds of both the appeals of the assessee are allowed." 15. Further, in view of above facts, it is clear that providing access to online database / journals is nothing but providing access to copyrighted article which does not amount to royalty. In this regard, reliance is placed on following decisions, wherein difference between a Copyright and a copyrighted article has been brought out very clearly: • Engineering Analysis Centre of Excellence (P.) Ltd. vs. CIT, [2021] 432 ITR 471 (SC) • CIT vs. ZTE Corporation, [2021] 282 Taxman 304 (SC) dismissed the....