AMERICAN CHEMICAL SOCIETY,USA vs. DCIT (INTERNATIONAL TAX), CIRCLE 1(1)(1), MUMBAI

PER OM PRAKASH KANT, AM

This appeal by the assessee is directed against final assessment order dated 27.01.2025, passed by the Ld. Assistant/
Deputy Commissioner of Income-tax (International Taxation) –
1(1)(1), Mumbai (in short the Assessing Officer), pursuant to the direction of Ld. Dispute Resolution Panel (in short ld. DRP) for assessment year 2022-23, raising following grounds:

Ame
ITA e facts and circumstances of the case an erred in assessing the total income of n 143(3) read with Section 144C(13) of t
63 as against the returned income of Nil.
e facts and circumstances of the case an ute Resolution Panel ("DRP") have erred i from Indian customers are chargeable to Article 12(3) of India-US Double Ta
DTAA") and under Section 9(1)(vi) of the A the facts and in the circumstances of th
AO/ DRP have erred in holding that the ived under Chemical Abstract Service ( ons (PUBS) division would be chargeable
-US DTAA being received for use of ndustrial, commercial or scientific experie ustrial, commercial or scientific equipmen he facts and circumstances of the case a RP have erred in not following the while holding that subscription charges re e chargeable to tax under the India-US D use of industrial, commercial or scientific e that the same has never been held in th he facts and circumstances of the case a P have erred in holding that the subscri er CAS and PUBS divisions would be cha der India-US DTAA being received for software.
he facts and circumstances of the case a have erred in not following the decision p bai Bench of the Income-tax Appellate Tri s own case for immediately preceding
Y 2014-15 to 2021-22, wherein on simi s, the Hon'ble ITAT held that the reven vision cannot be taxed as royalty under S well as Article 12(3) of India-US DTAA.
e facts and circumstances of the case an erred in levying interest of INR 4,32, of the Act.
erican Chemical Society
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nd in law, the the Appellant the Act at INR nd in law, the in holding that tax as royalty ax Avoidance ct.
e case and in e subscription
(CAS) division to tax in India of information ence and / or nt.
and in law, the principle of eceived by the DTAA as being equipment, not he past by the and in law, the iption charges argeable to tax r use of ACS and in law, the passed by the ibunal ("ITAT") g assessment ilar facts and nue from CAS
Section 9(1)(vi) nd in law, the 67,210 under 4. That on th
Ld. AO has g liability (inclu
5. That on th
Ld. AO has e refund under 6. That on th
Ld. AO has e
270A of the 2. We have heard the relevant materi assessee is aggrieved holding that the su abstract service divi
‘royalty’ under domes received for use of in scientific experience scientific equipment.
submitted that ident
Bench of the Tribuna year 2014-15 and IT 2013-14 in favour of of consistency withou
Ld. Assessing Officer treating the subscrip and publication divi assessment year 201
Ame
ITA e facts and circumstances of the case an grossly erred in computing the aggrega ding interest) of the Appellant at INR 19,2
e facts and circumstances of the case an erred in computing the correct amount
Section 244A of the Act.
e facts and circumstances of the case an erred in initiating penalty proceedings
Act.
rival submissions of the parti ials on record. In the groun d with the finding of the ld Asse ubscription charges received u ision and publication division stic law as well as under India U formation concerning industrial and/or for use of industrial,
. Before us, the Ld. counsel fo ical issue has been decided by al in ITA No. 6811/Mum/2017
TA No. 1160/Mum/2024 for a the assessee and therefore, in v ut any change of facts and circ r/DRP is not justified in uphold ption charges under chemical a sion as royalty. We find that 14-15 has specifically noted tha erican Chemical Society
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nd in law, the ate income tax
20,49,126. nd in law, the of interest on nd in law, the under Section ies and perused nds raised, the essing Officer in under chemical was taxable as US DTAA, being l, commercial or commercial or for the assessee the Co-ordinate for assessment assessment year view of principle cumstances, the ding addition for abstract division the Tribunal in at consideration received from ‘copyri therefore, same does the Tribunal (supra) i
“17. We hav relevant mat authorities o respect to th the CAS fee.
not provide previous exp creation of/
granting acc its experien evolving da information sample agre search, view taking a pri any manne prohibited. F the journal o in the journ amend or r customers a personal use any copyrigh is provided the informat the customer control or do the question for use or ri commercial o
18. To put a the consider the book/ ar the right to derivative w does not ob
Ame
ITA ighted article’ is different from not quality as ‘royalty’. The rel is reproduced as under:
ve heard the rival submissions and pe terial on record including the order of on the issue in dispute. We find that he PUBS division coincides with the . The journal provided by the PUBS d e any information arising from a perience. The assessee's experience f/maintaining such information on cess to the journals, the assessee neith nces, techniques or methodology em atabases with the users, nor imp relating to them. As is clearly eviden ements, all that the customers get is t w and display the articles (whether on int) and reproducing or exploiting th er other than for personal use
Further, the customers do not get any or articles therein. They can only view nal that they have subscribed to an replicate or reproduce the journal.
are only able to access journal/a e of the information. No 'use or right ht or any other intellectual property of by the assessee to its customers. Fu tion resides on servers outside India rs have no right or access, nor do the ominion over the servers in any way.
n of such payments qualifying as con ight to use any equipment, whether or scientific, does not arise.
comparison, if someone purchases a ration paid is not for the use of the co rticle. The purchaser of a book does n make multiple copies for re-sale o works of the book, i.e., the purchaser btain the copyright in the book. Sim erican Chemical Society
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‘copyright’ and levant finding of erused the f the lower issue with issues on division do assessee's lies in the nline.
By her shares mployed in parts any nt from the the right to nline or by e same in is strictly y rights to the article nd cannot
Thus, the articles for t to use' in f any kind urthermore, a, to which ey possess
Therefore, nsideration industrial, book, then opyright in not acquire r to make of a book milarly, the purchaser of access does and does no short, the pu article or of copyrighted p is not royalt case too, wh article, copyr all purposes is different f former, i.e.
royalties.
19. Thus, th this order in CAS fee are received from also, and a 'Royalty' in Article 12(3)
2.1 Further, in ass the finding of the Co
The relevant finding under:
“10. The af
Bench has Coordinate subsequent we have not the assessm remained th
2020-21 and other income from India. T changes in t impugned a reopened u/
challenged t
Ame
ITA f the assessee's journals, articles or s not have the right to make copies f ot have the right to make derivative urchaser has not acquired the copyri of the database. What the buyer product, and accordingly the consider ty, but for purchase of a product. In t hat is acquired by the customer is a co rights of which continue to lie with as . lt is a well settled law that copyrigh from a copyright, and that considerat a copyrighted article does not q he principles noted by us in the earl n the context of the income earned b squarely applicable to the subscriptio m customers of PUBS division for sale ccordingly PUBS fee also does not terms of section 9(1)(vi) of the Act a of the India-USA DTAA.”
sessment year 2013-14, the Tr o-ordinate Bench in assessmen in assessment year 2013-14 is foresaid order so passed by the C since been consistently followed
Benches while adjudicating the m assessment years right up to A.Y 20
ted in the beginning, the AO has also ment order that assessee's business m he same in comparison to A.Y. 2014- d stream of revenue was also the sam e has been earned by the assessee
Thus, admittedly and undisputedly, th the facts and circumstances of the c assessment year except that the m
/s 147 of the Act. Though the Rev he orders so passed by the Coordinat erican Chemical Society
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r database for re-sale works. In ight of the gets is a ration paid the instant opyrighted ssessee for hted article tion for the qualify as lier part of by way of on revenue e of journal qualify as as well as ribunal followed nt year 2014-15. s reproduced as Coordinate d by the matter for 021-22. As o stated in model has -15 to A.Y.
me and no e company here are no case in the matter was venue has te Benches before the H currently pe which has e so passed b no changes see no reas
Coordinate B subsequent so taken by that subscr divisions ca section 9(1)(v the hands o hereby direc
11. In light addition, oth the ground become aca necessary same are le
2.2 As facts and ci being identical, witho the principle of con ordinate Bench of th received under chem division are not in th
Income-tax Act or u
Accordingly, the issu the assessee is allowe

Ame
ITA

Hon'ble Bombay High Court and the ending adjudication, however, there i ither been sought or granted against y the Coordinate Benches. Given tha in the facts and circumstances of the son to deviate from the view so tak
Bench which has consistently been f years. In light of the same, we uphol the ld AR on behalf of the assessee ription revenues for CAS as well nnot be brought to tax as royalty in vi) as well as Article 12(3) of India-US of the assessee and the addition so cted to be deleted.
of the aforesaid, where we have d her grounds raised by the assessee challenging the juri iction of the ademic in nature and we donot to adjudicate the same a eft open.”
ircumstances in the year unde out there being any material ch nsistency and respectfully foll he Tribunal, we hold that subsc mical abstract service division a he nature of royalty under the p under the provisions of the In ue in dispute raised in the groun ed.
erican Chemical Society
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e matter is is no stay the orders t there are e case, we ken by the followed in ld the plea e and hold as PUBS n terms of SA DTAA in o made is deleted the e including
AO have deem it and the er consideration hange, following lowing the Co- cription charges and publication provisions of the ndia US DTAA.
nds of appeal of 3. In the result, th
Order pronoun (RAHUL CHA
JUDICIAL M
Mumbai;
Dated: 13/11/2025
Rahul Sharma, Sr. P.S.

Copy of the Order forward
1. The Appellant
2. The Respondent.
3. CIT
4. DR, ITAT, Mumbai
5. Guard file.

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Ame
ITA he appeal of the assessee is allow ced in the open Court on 13/
S
AUDHARY)
(OM PRAK
MEMBER
ACCOUNTA ded to :

BY ORDER

(Assistant Re

ITAT, Mu erican Chemical Society
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wed.
11/2025. d/-
KASH KANT)
ANT MEMBER
R, gistrar) umbai