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TMI Blog2022 (3) TMI 1509X X X X Extracts X X X X X X X X Extracts X X X X ..... as analysed the provisions of Income tax Act vis-a-vis provisions of DTAA. AR produced the Master Service Agreement dated 01/04/2013 between EduNxt Global SDN BHD and Aditya Birla Management Corporation Ltd., we observe that this agreement has not been filed before the authorities below. The DRP categorically observed that except for the invoice, assessee did not produce any other relevant information. In the interest of justice it is appropriate to remit the issue in dispute to the file of the Ld.AO for deciding the comparability of these transactions in the light of the judgment of the Hon ble Supreme Court in Engineering Analysis Centre of Excellence Private Limited (supra) and the decisions relied by the Ld.AR reproduced herein above. Accordingly, the issue in dispute is remitted to the Ld.AO for fresh decision with the above directions. Appeal of the assessee is partly allowed for statistical purposes. - IT(IT) A No. 2496/Bang/2017 - - - Dated:- 30-3-2022 - Shri. Chandra Poojari, Accountant Member And Smt. Beena Pillai, Judicial Member For the Assessee : Shri Padamchand Khincha, CA. For the Revenue : Shri K.V. Aravind, Advocate and Standing Counsel for Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id. AO be quashed or in the alternative, the addition of Rs. 1,27,42,140 be deleted. The appellant prays accordingly. 2. Brief facts of the case are as under: The assessee is incorporated under the local laws of Malaysia. The company is an educational institution based out of Malaysia which provides online education courses to individuals and corporates. Edunxt is an educational institution based out of Malaysia which provides online education courses to individuals for various post-graduation courses. During the FY 2013-14, Edunxt had provided services to ABMC in the form of online education in MBA course to certain employees of ABMC. 2.1 It is submitted that the program was delivered and offered through the Edunxt platform (Learning Management System hosted on a third party cloud which is located outside India). The program duration is approximately 24 months comprising of 9 core subjects, 2 elective subjects and 1 research project. Each of the subject is 14 weeks in duration and delivered in a blended mode of online asynchronous discussions and webinars. 2.2 Assessee submitted that the course is primarily driven on the concept of self-study i.e., the students w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Thus, in terms of DTAA consideration paid for use or right to use of the literary work in the form of course content, tutorials, webinar through the software would constitute Royalty under DTAA with Malaysia. Accordingly, we are inclined to uphold the action of the AO. 3.3 Upon receipt of the DRP directions, the Ld.AO passed impugned order by making an addition of Rs.1,27,42,135/- in the hands of the non resident assessee. 4. Aggrieved by the order of Ld. AO, the non resident assessee is in appeal before this Tribunal. 4.1 The Ld.AR submitted that the subscription fee received by the assessee from Indian customer for providing access to the database is not in the nature of royalty, either under the Act or under the India-Malaysia DTAA. He submitted that the subscription fees received by the assessee are in the nature of business income. However, in the absence of a PE in India, the amount received is not taxable as per the provisions of IndiaMalaysia DTAA. 4.2 Ld.AR submitted that, the assessee being a tax resident of Malayasia has to be governed under the India-Malaysia DTAA. He submitted, the definition of royalty under Article-12 of the India-Malaysia is narro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any kind received as a consideration for the, use of , or the right to use , any copyright of a literary, artistic, or scientific work, including cinematographic films or work on film, tape or other means of reproduction for use in connection with radio or television broadcasting, any patent, trademark, design or model, plan, secret formula or process, or information concerning industrial, commercial, or scientific experience. The relevant article reads as under: 12. Royalty 3. The term royalties as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films or films or tapes used for television or radio broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial or scientific equipment, or for information (know-how) concerning industrial, commercial or scientific experience. 5.1 It is thus submitted by the Ld.AR that the Indian customer do not have right to use the copyright in the detabase and hence the payments cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any TDS under section 195 of the Income-tax Act. The answer to this question will apply to all four categories of cases enumerated by us in paragraph 4 of this judgment. The Ld.AR was called upon by the bench to produce agreement if any, in order to understand the right that the Indian customer holds on the database shared by the assessee. At the time of hearing, the Ld.AR produced the Master Service Agreement dated 01/04/2013 between EduNxt Global SDN BHD and Aditya Birla Management Corporation Ltd., we observe that this agreement has not been filed before the authorities below. The DRP categorically observed that except for the invoice, assessee did not produce any other relevant information. In the interest of justice it is appropriate to remit the issue in dispute to the file of the Ld.AO for deciding the comparability of these transactions in the light of the judgment of the Hon ble Supreme Court in Engineering Analysis Centre of Excellence Private Limited (supra) and the decisions relied by the Ld.AR reproduced herein above. Accordingly, the issue in dispute is remitted to the Ld.AO for fresh decision with the above directions. In the result the appeal of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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