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2023 (5) TMI 1037 - AT - Income TaxIncome deemed to accrue or arise in India - Amount received by the assessee from Indian customers towards subscription fee - nature of royalty or Fee for Technical Services (FTS) - HELD THAT:- Undisputedly, the assessee collects material/information in the field of cessation, technology, medical information and product and services and credited a database material. Assessee’s products include printing of books and journals and line database solution, the disputed revenue was earned by the assessee towards subscription fee for Indian subscribers for providing excess to its science database, various information relating to the subject, have been collated and stirred. As per the assessee, the subscription fee received is in the nature of business income and in absence of a PE in India is not taxable in terms of India-UK DTAA. The aforesaid submission of the assessee has not found favour with the departmental authorities. From the material placed before us, it is observed, while deciding identical issue in case of assessee’s sister concern, CIT vs. Infosys Technology Ltd [2011 (10) TMI 370 - KARNATAKA HIGH COURT] the coordinate Bench has held that the subscription fee received by the assessee is not in the nature of royalty or FTS. DR has brought to our notice two decisions of CIT vs. Wipro Ltd [2011 (10) TMI 473 - KARNATAKA HIGH COURT] and CIT vs. Infosys Technology [2011 (10) TMI 370 - KARNATAKA HIGH COURT] wherein contrary view has been expressed by the Hon'ble High Court but as observed, while deciding the Special Leave Petition filed by the concerned assessees, the Hon'ble Supreme Court has set aside the respective judgments of the Hon'ble Karnataka High Court and restored the matters back for fresh adjudication keeping in view the decision of the Hon'ble Supreme Court in case of Engineering Analgsis Centre of Excellence [2021 (3) TMI 138 - SUPREME COURT] This is so because while deciding the matters relating to Wipro Ltd. and in Infosys Technology Ltd.,it followed its own decisions in case of CIT vs. Samsung Electronics Co. Ltd. [2011 (10) TMI 195 - KARNATAKA HIGH COURT] which stood reversed by the Hon'ble Supreme Court in case of Engineering Analysis Centre to Excellence Pvt. Ltd. (supra). We hold, the subscription fee received by the assessee from Indian customers is not in the nature of royalty/ FTS/FIS under the provisions of India-UK DTAA. Thus, the receipts being in the nature of business profit, in absence of a PE in India, they are not taxable. Appeal of assessee allowed.
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