AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (4) TMI 97
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....are no taxes outstanding on the property, Property Information (clean title of the property), Tax payment status/outstanding tax liabilities/tax defaults, etc. The assessee also provides, property title searches related service. The Assessee as part of its captive business development (BD) services perform, (i) independent business development by identifying and suggesting new opportunities for its group companies, and (ii) by engaging with title process service providers and abstractors at behest of Coforge Business Process Solutions Pvt. Ltd. earlier known as SLK Global Solutions Pvt. Ltd (in short 'Coforge India') to provide title search and related services. During the period relevant to assessment year under appeal, the assessee inter alia received following payments for the services under two segments: - Title process services : Rs. 7,73,45,014/- - Marketing support services : Rs. 28,44,91,579/- The assessee did not offer above payments to tax claiming them to be not taxable in India under India-US Double Taxation Avoidance Agreement (DTAA). Per contra the Assessing Officer vide impugned assessment order held that the payments received by assessee f....
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....nce industrial, commercial or scientific equipment of the Appellant and further alleging that the receipts received by the Appellant shall qualify as royalty. 3.4. The Ld. Dispute Resolution Panel ('Ld. DRP') / Ld. AO grossly erred on the facts and in the circumstances of the case and in law in not appreciating the ratio of the judicial decisions which were relied upon by the Appellant during the course of the hearing on the issue of title process services. 4.1. The Ld. Dispute Resolution Panel ("Ld. DRP') / Ld. AO grossly erred on the facts and in the circumstances of the case and in law in alleging that the Marketing Support Services ("MSS") receipts amounting to Rs. 28,44,91,579 are covered under Fees for Included Services ("FIS") whereas these are mere sales and marketing services and thus do not fall within the definition of FIS as envisaged under Article 12 of the India US Treaty. 4.2. The Ld. Dispute Resolution Panel ("Ld. DRP') / Ld. AO grossly erred on the facts and in the circumstances of the case and in law in wrongly assuming that the definition of Fees for Included Services in Article 12(4) of India US Treaty includes the word....
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.... within the meaning of Article 12(4)(b) of the India-US DTAA. The assessee filed objections before the Dispute Resolution Panel (DRP). The DRP, vide directions dated 21.09.2023, rejected the objections. Thus, the AO passed the impugned final assessment order making addition of Rs. 7,73,45,014/- as receipts in the nature of Royalty and Rs. 28,44,91,579/- in respect of MSS as FTS. 7. The ld. AR submits that, in so far as Title Process Services are concerned, the assessee only providing access to third party database. The assessee collates relevant data from information already available in public domain about title, mortgage, tax payment status etc, in respect of properties situated in US and provides such data to Coforge India. On the basis of databases provided by the assessee, Coforge India generates Title search reports and delivers them to customers. The assessee recovers actual cost plus markup of 10% thereon from its Indian Associated Enterprises (AE). The assessee while providing title process service neither shares its own experience, techniques, or methodology employed in searching databases nor imparts any information relating thereto. Thus, the payments received by the....
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....n AE earns income because of the commercial experience of the assessee and the information provided by the assessee. Therefore, the receipts of the assessee in lieu of providing databases fall within the definition of royalty u/s 9(1)(vi) of the Act as well as Article 12 of the India-US DTAA. 9.1. In respect of MSS, the ld. DR submits that the assessee has failed to discharge its onus in proving that MSS does not "make available" any technical knowledge, experience, skill, know-how, etc. Reiterating findings of the AO, the ld. DR placed reliance on the following decisions: - H.J Heinz Company vs. ADIT, 180 taxmann.com 473 (Delhi-Trib.); - ACIT vs. Sabre Decision Technologies International LLC, 152 taxmann.com 51 (Delhi-Trib.); & - Leonhardt Andra Und Partner, GmbH vs. CIT, 122 Taxman 223 (Calcutta). 10. We have heard the submissions made, considered the decisions on which reliance has been placed by rival sides and have examined the orders of the authorities below. The assessee, in the present appeal has assailed the additions made by the AO in respect of two streams of receipts by the assessee, i.e: (i) Title Search Services Rs. 7,73,45,01....
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....strial, commercial, or scientific experience. We are not in agreement with the findings of the AO. The expression "commercial experience" under Article 12 implies transfer of specialized, actionable knowledge or know-how that equips the recipient of service to apply that experience on its own. For collating relevant information from existing databases available in public domain no commercial experience is required. In any case, it does not emerge from the documents available on record that the assessee has shared the methodology employed for searching database or has imparted any information relating thereto. The assessee has forwarded relevant information extracted from existing database to Coforge India for preparing title search report of property with reference to ownership - chain of title, mortgage - encumbrances, tax due/disputes, etc. As is evident from the submissions of the assessee, the assessee is not sharing any commercial information; it is only providing information extracted from data available in the public domain. The assessee procures and provides access to different databases to the Indian AE for title search. Based on such data, the Indian AE generates reports ....
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....s. Thus, it is very much clear, only limited right of access to the database was granted to customers on subscription basis. Therefore, in our view, the amount received will not fall within the ambit of royalty as defined under Article 12(3) of the tax treaty. It is relevant to observe, while treating the subscription fee received by the assessee as royalty, the Departmental Authorities have heavily relied upon the decision of the Hon'ble Karnataka High Court in case of Samsung Electronics Co. Ltd. (supra). The other decision cited by learned Departmental Representative has simply relied upon the decision rendered in case of Samsung Electronics Co. Ltd. (supra). However, the decision of the Hon'ble Karnataka High Court stands recovered by the decision of Hon'ble Supreme Court in case of Engineering Analysis (supra) [Emphasized by us] 13. The aforesaid decision supports our view that payments made for mere providing access to date already available in public domain does not fall within the meaning of royalty as defined under Article 12(3) of the India-US DTAA. Thus, the addition made in respect of payment received by the assessee for provisioning of Title Search Se....
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....ion or enjoyment of the right, property or information for which a payment described in paragraph 3 is received ; or (b) make available technical knowledge, experience, skill, know-how, or processes, or consist of the development and transfer of a technical plan or technical design." Protocol to India US DTAA further refers to Memorandum of Understanding concerning fee for included services in Article 12. The relevant exceprts from the Protocol are extracted herein under: "Article 12 includes only certain technical and consultancy services. But technical services, we mean in this context services requiring expertise in a technology. By consultancy services, we mean in this context advisory services. The categories of technical and consultancy services are to some extent overlapping because a consultancy service could also be a technical service. However, the category of consultancy services also includes an advisory service, whether or not expertise in a technology is required to perform it. Under paragraph 4, technical and consultancy services are considered included services only to the following extent: (1) as described in paragraph 4(a), i....