TMI Blog2023 (7) TMI 1089X X X X Extracts X X X X X X X X Extracts X X X X ..... a in the absence of PE. Accordingly, the grounds of both the appeals of the assessee are allowed. - ITA No. 1085/Del/2022 - - - Dated:- 24-7-2023 - Shri G.S. Pannu, Hon ble President And Ms. Astha Chandra, Judicial Member For the Assessee : Shri Ravi Sharma, Advocate, Shri Rishabh Malhotra, Advocate For the Department : Shri Vizay Basanta, CIT- DR ORDER PER ASTHA CHANDRA, JM The appeal filed by the assessee is directed against the order dated 23.03.2022 passed by the Ld. Commissioner of Income Tax (IT) Delhi 3 ( CIT ) under section 263 of the Income Tax Act, 1961 (the Act ) pertaining to Assessment Year ( AY ) 2017-18. 2. The assessee has taken the following grounds:- Ground No. 1 On the facts and in the circumstances of the ease and in law, the Appellant submits that the Learned Commissioner of Income Tax ( Ld. CIT ) erred in revising the assessment order passed by the Income tax Officer, Ward International Tax 3(1)(2), Delhi ( Ld. AO ) under Section 263 of the Income Tax Act, 1961 ( Act ). The Appellant prays that the order passed under section 263 is liable to be quashed. Ground No. 2 On the facts and in the circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ortal. The Ld. Assessing Officer ( AO ) completed the assessment under section 143(3) of the Act on 20.12.2019 on total income of Rs. 5,56,79,800/-. 3.1 In exercise of powers vested in him under section 263 of the Act, the Ld. CIT cancelled the said assessment order on 23.03.2022 holding that the same is erroneous and prejudicial to the interest of Revenue as the assessee had received a sum of Rs. 5,56,79,800/- from customers in India on which though tax was deducted @ 10% at the time of remittances but the same was not offered to tax in India. He also observed that during the course of assessment proceedings no details were called for with regard to ascertaining the taxability of these receipts. 3.2 The Ld. CIT, therefore, issued Show Cause Notice ( SCN ) mentioning therein, inter alia that during the course of assessment proceedings for AY 2018-19 and 2019-20 the Ld. AO through extensive enquiry/verification has ascertained that the receipts are taxable in the hands of the assessee as Fee for Technical Services ( FTS )/Fee for Included Services ( FIS ) under section 9(1)(vii) of the Act and Article 12 of India-USA DTAA. Since the facts for AY 2017-18 are identical, why acti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h of the Tribunal in the case of sister entity, namely Elsevier Information Systems GmbH which employed the same business model and was in the same business, the receipts in the case of the assessee ought to be classified as business receipts not taxable in India. The Ld. AO accepted the submissions of the assessee. 5.2 The Ld. AR strongly refuted the observations of the Ld. CIT made by him in his discussion on merits of the case. According to Ld. AR in the case of other Group Entities on similar issues of access / subscription to website, the Mumbai Bench of the Tribunal as also the Hon ble Authority for Advance Rulings held that subscription fee would be in the nature of business income only. The Ld. AR pointed out that the facts in the assessee s case are paramateria to those in Elsevier Information Systems GmbH vs. DCIT (IT) in ITA No. 1683/Mum/2015 and ITA No. 7126/Mum/2019 and therefore decision in that case squarely apply to the assessee. In the decision (supra) the applicable treaty was Indo-German Treaty wherein the provisions of FTS are similar to section 9(1)(vii) of the Act. In the assessee s case, however the applicable treaty is Indo-US Tax Treaty wherein the benef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he very basis of assumption of jurisdiction by the Ld. CIT under section 263 of the Act in AY 2017-18 presently under consideration does not survive. In its decision in ITA No. 1877/Del/2022 and ITA No. 1876/Del/2022 rendered on 05.04.2023 for AY 2018-19 and AY 2019-20 respectively, the Tribunal in regular appeals on merit held as under: 10. We have heard the parties and perused the material available on record and gave our thoughtful consideration. 11. It is found that the assessee earns income in the nature of subscription fees from Indian subscriber for providing subscription to data base Lexis Nexis wherein host of information started on subject/topic relating to legal and tax matters. The person interested to purchase the electronic version 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 arti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... des '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 Elsevier Information Systems GmbH Services India (P.) Ltd. [2011] 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew of the matter, the subscription fee received cannot be considered as a fee for technical services as well. 13. In the case of Elsevier Information System GmbH (supra) held that receipt of the assessee therein do not qualify as FTS as per the provisions Section 9(1) (vii) of the Act, wherein the Tribunal Bench of Mumbai adjudicated the issue regarding treaty of Indo-German Tax Treaty wherein the provisions of FTS are similar to Section 9(1)(7) of the Act. The only difference to the present appeal is that the applicable treaty is Indo-US Tax Treaty. The Article 7 of India-US DTAA, the income from subscription to Assessee s data base is in the nature of business profit, therefore, the same is not taxable in 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 asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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