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TMI Blog2024 (12) TMI 1483X X X X Extracts X X X X X X X X Extracts X X X X ..... address the challenges and opportunities presented by digital transformation, modern applications and cloud computing. It enables to automate the collection, ingestion and analysis of application, infrastructure, security and IT data to derive actionable insights. 4. At the time of assessment, assessee submitted that the receipts received from Indian customers did not constitute consideration for the use or right to use of any copyright or equipment or for information concerning industrial, commercial or scientific knowledge/ experience etc. The receipts are not in consideration of make available any technical knowledge/ skill etc. to the customers. It was submitted that the above said revenues are neither taxable as royalty nor as fees for technical services (FTS) under the Income tax Act, 1961 as well as the India-US tax treaty. The assessee has received following receipts from India: S. No. Nature of Receipts Name of the payer Amount INR Taxability 1. Service fee for providing subscription to Sumo Logic solution Rupeek Fintech Pvt. Ltd. 9,19,280/- Not offered 2 Razorpay Software Private to tax Limited 8,04,66,028/- 3 Ibibo Group Private Limited 2,91,89,924/- 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Financial data of the assessee reveals that assessee has shown huge losses in all the years 2019 to 2021. Therefore, it is amply clear that the said income has not suffered tax anywhere, neither in India nor in USA. He also observed that assessee has carried on similar business operations in other countries and it failed to provide the details of tax statement in their source countries on identical transactions. Accordingly, he treated the income received by the assessee in the nature of consultancy and its taxability as FTS under the provisions of Income-tax Act under the relevant provisions of India-US DTAA. Accordingly, he made the addition of Rs. 14,09,09,968/-. 7. Further, proposed above income to the tax as FTS @ 10% on the other provisions of Income tax and India-US DTAA. 8. Aggrieved, with the above order assessee preferred objections before learned Dispute Resolution Panel-2 ("DRP" in short), New Delhi. The learned DRP has dismissed the grounds of objections raised by the assessee. Accordingly, final assessment order was passed dated 28.09.2023. Aggrieved with the above order assessee is in appeal before us. 9. At the time of hearing learned AR brought to our notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2023 dated 21.08.2024; decision of ITAT in Mixpanel Inc. v. ACIT (pages 192 to 200 of case law paper book) and he prayed that the assessee has not rendered any service to the customers in India and has not transferred any technology which will fall under the category of FTS. 10. On the other hand, learned DR relied on the detailed findings of the Assessing Officer and DRP. 11. Considered the rival submissions and material placed on record. We observe that assessee has provided cloud-native machine data analytics solution to various customers in India on the basis of monthly/ quarterly. Further, it was brought to our notice that assessee has not made available the relevant technology nor transferred the same to its customers in India. We further notice that assessee also filed tax resident certificate before the lower authorities. The Assessing Officer considered the submissions of the assessee and he merely observed that global income of the parent company is loss, therefore, he was of the opinion that the income derived by the assessee in India were not offered to tax effectively and he further observed that there is no evidence to show that the relevant income was offered to ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent Services means, access to assessee's course and/or Specialization certificate services, including access to course assessments and grades through online open content offerings. ......... ....... . 11. We have considered rival submissions in the light of decisions relied upon and perused the materials on record. Insofar as the activity of the assessee is concerned, it is established on record that the assessee provides a global online learning platform, wherein, various courses and degrees from leading universities and companies are provided. It is a fact on record that the contents of such courses and degrees are created by the concerned universities and companies and not by the assessee. The assessee acts as a mere facilitator between the concerned university/companies and the customers who want to undertake the courses of the concerned university/companies. The assessee merely provides access to the contents of the universities/companies through the platform on receipt of fees. 12. In fact, the Assessing Officer in the draft assessment order has clearly observed that the assessee is not an educational institution but an aggregation service provider, which brings edu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er has acknowledged the fact that the assessee is an aggregation service provider and not a content creator, in the same breath, he says that assessee's contention that it is a mere aggregator of educational courses is not correct. The Assessing Officer has not brought on record any material to establish the fact that the assessee provides technical services through its online platform. Merely because the assessee has a customized landing page, it does not mean that the assessee provides technical services, that too, through human intervention. The Assessing Officer, in our view, has not been able to prove such fact. Even, assuming for argument's sake, the services provided by the assessee is of technical nature, that by itself would not be enough to bring such receipts within the purview of Article 12(4) of India USA DTAA, unless the make available condition is satisfied. Burden is entirely on the Revenue to prove that in course of rendition of services, the assessee has transferred technical knowledge, know-how, skill etc. to the service recipient, which enables him to utilize such technical knowledge, know-how, skill etc. independently without aid and assistance of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Services India (P.) Ltd. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e database maintained by Taxman/CTR online etc. he only gets access to a copyrighted article or judgment and not the copyright. Similar is the case with the assessee. Therefore, in the facts of the present case, the subscription fee received by the assessee cannot be treated as royalty under Artile-12(3) of India- Germany Tax Treaty." 16. Similar view was expressed by another Coordinate Bench in case of Relx Inc. Vs. ACIT (supra). In our view, the ratio laid down in these decisions squarely apply to the facts of the present appeal. In view of the aforesaid, we hold that the receipts do not qualify as FIS under Article 12(4) of India - USA tax treaty. 17. Thus, our decision above, would apply mutatis mutandis to ITA No. 3646/Del/2023 as well." 12. The above decision squarely applies to assessee's facts. We observe that the assessee has submitted TRC and also offered income generated in India in the resident country and offered the same as income and it does not make any difference whether the global income assessed to tax are income or loss, as long as, the income generated are offered in the resident country as business income which is the requirement of law. In view of the ab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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