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2023 (7) TMI 618 - HC - Income TaxRoyalty receipts or FTS - commission fee for payment “production and editorial charges”- Addition u/s 9(1)(vi) of the Act and Article 12 of the India-Germany DTAA - HELD THAT:- There were no special skills or knowledge that the respondent/assessee's personnel were required to possess to render the services that were contemplated under the Commissionaire Agreement. The respondent/assessee also did not render any professional advice, or service concerning a specialised field. As indicated for a service to be categorised as a technical service, it had to be concerned with applied science, i.e., using scientific knowledge for practical applications, or industrial science concerning, relating to or derived from industry. Therefore, the contention of Appellant that on account of there being human intervention, the services rendered by the respondent/assessee should be considered as technical services, is a submission, which according to us, is completely misconceived. Given this position, we are not inclined to interfere with the decision arrived at by the Tribunal concerning the deletion of the addition made on account of commission received by the respondent/assessee. CIT(A)'s conclusion that the said amount received by the respondent/assessee had attributes of FTS was, in our view, erroneous. The attributes of what constitutes FTS has been dealt with extensively by the coordinate bench decision of this Court in DIT v. Panalfa Autoelektrik Ltd. [2014 (9) TMI 706 - DELHI HIGH COURT] In this judgment, the coordinate bench has dealt with the order of the Authority for Advance Ruling (AAR) rendered in Wallace Pharmaceuticals (P.) Ltd. [2005 (9) TMI 26 - AUTHORITY FOR ADVANCE RULINGS] The attempt of Mr Bhatia to distinguish the judgment in DIT v. Panalfa Autoelektrik Ltd. [2014 (9) TMI 706 - DELHI HIGH COURT] must fail, as it misses the true ratio of the judgment. Addition of receipts as a subscription fee for e-journals from its affiliates, could not be treated as royalty, given the judgment of the Supreme Court rendered in Engineering Analysis [2021 (3) TMI 138 - SUPREME COURT] However, in the written submissions, for the first time, contrary to the submission, an argument has been advanced that the subscription fee should be treated as FTS, and in the alternative, as royalty. We are of the opinion, the submission that subscription fee should be treated as FTS cannot be accepted, as this was not the stand of the appellant/revenue before the Tribunal. This is a flip-flop which the respondent/assessee would do well to abjure. As in our opinion, the subscription amount cannot be treated as royalty, having regard to the fact that there is nothing on record to suggest that the respondent/assessee has granted the right in respect of copyright to the concerned subscribers of the e-journals. All that the respondent/assessee did was to sell the copyrighted publication to the concerned entities, without conferring any copyright in the said material. Tribunal, in our view, rightly deleted the addition made under this head, given the judgment rendered by the Supreme Court in the case of Engineering Analysis.
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