AMERICAN CHEMICAL SOCIETY,HARYANA vs. THE DEPUTY COMMISSIONER OF INCOME TAX, (INTERNATIONAL TAXATION) CIRCLE - 1(1)(1), MUMBAI, MUMBAI

आयकरअपीलीयअिधकरण�ायपीठमुंबईम�। IN THE INCOME TAX APPELLATE TRIBUNAL “I” BENCH, MUMBAI BEFORE SHRI ANIKESH BANERJEE, JM & SHRI ARUN KHODPIA, AM I.T.A. No.1167/Mum/2026 (Assessment Year: 2023-24) American Chemical Society The Deputy Commissioner of Income C/o. Deloitte Haskins and Sells Tax, (International Taxation) Circle- LLP, 7th Floor, Building 10, 1(1)(1), Mumbai Room No.534, 5th floor, Kautilya Tower B, DLF Cyber City Vs. Complex, DLF City Phase-II, Bhavan, C-41 to C-43, G Block, Gurgaon, Haryana-122002 Bandra Kurla Complex, Bandra (East), Mumbai-400051 PAN: AALCA4959L Assessee- अपीलाथ� / Appellant Revenue-��थ�/ Respondent :

: Shri Vishal Karla (Virtually Assessee by Present) Revenue by : Shri Satya Pal Kumar – CIT DR. Date of Hearing : 20.05.2026 Date of Pronouncement : 10.08.2026 O R D E R Per Arun Khodpia, AM: The captioned appeal is filed by the assessee, emerging from the order u/s 143(3) r.w.s 144C(13) of the Income Tax Act, 1961 [in short,“the Act”] dated 26.12.2025 for Assessment Year (AY) 2023-24.

ITA No. 1167/Mum/2026 American Chemical Society 2. That on the facts and circumstances of the case and in law, the Ld. AO/ Dispute Resolution Panel ("DRP") have erred in holding that the receipts from Indian customers are chargeable to tax as royalty in terms of Article 12(3) of India-US Double Tax Avoidance Agreement ("DTAA") and under Section 9(1)(vi) of the Act. 2.1 That on the facts and in the circumstances of the case and in law, the Ld. AO/ DRP have erred in holding that the subscription charges received under Chemical Abstract Service (CAS) division and Publications (PUBS) division would be chargeable to tax in India under India-US DTAA being received for use of information concerning industrial, commercial or scientific experience and / or for use of industrial, commercial or scientific equipment. 2.2 That on the facts and circumstances of the case and in law, the Ld. AO/ DRP have erred in not following the principle of consistency, while holding that subscription charges received by the appellant are chargeable to tax under the India-US DTAA as being received for use of industrial, commercial or scientific eguipment, not appreciating that the same was not held by the Ld. AO/ DRP in the initial years where the Appellant's matters were first picked up for scrutiny. 2.3 That on the facts and circumstances of the case and in law, the Ld. AO/ DRP have erred in holding that the subscription charges received under CAS and PUBS divisions would be chargeable to tax in India under India-US DTAA being received for use of ACS databases/software. 2.4 That on the facts and circumstances of the case and in law, the Ld. AO/DRP have erred in not following the decision passed by the Hon'ble Mumbai Bench of theIncome- tax Appellate Tribt:Jrial ("ITAT") in Appellant's own case for immediately preceding assessment years i.e. AY 2013-14 to 2022-23, wherein on sim'ilar facts and circumstances, the Hon'ble ITAT held that the revenue from CAS and PUBS division cannot be taxed as royalty under Section 9(1)(vi) of the Act as well as Article 12(3) of India-US DTAA. 3. That on the facts and circumstances of the case and in law, the Ld. AO has erred in levying interest of INR 6,74,17,515 under Section 234B of the Act. 4. That on the facts and circumstances of the case and in law, the Ld. AO has grossly erred in computing the aggregate income tax liability (including interest) of the Appellant at INR 29,64,82,569. 5. That on the facts and circumstances of the case and in law, the Ld. AO has erred in computing the correct amount of interest on refund under Section 244A of the Act. 6. That on the facts and circumstances of the case and in law, the Ld. AO has erred in initiating penalty proceedings under Section 270A of the Act. 7. That on the facts and circumstances of the case and in law, the Ld. AO has erred in considering the receipts as INR 1,507,715,736 while passing the draft assessment order, instead of the total receipts of the Assessee under CAS and PUBS division which amounts to INR 1,504,753,959.”

ITA No. 1167/Mum/2026 American Chemical Society 3. Briefly stated, the assessee has filed its return for AY 2023-24 on 27.10.2023 declaring total income of Rs.40,76,809/-. The case was selected for complete scrutiny under CASS. Accordingly, statutory notices were issued and responded by the assessee. The Ld. Assessing Officer (in short, “Ld. AO”) has categorically noted in the assessment order that the business model of assessee remained the same and the stream of revenues are also the same and no other incomes were earned by the assessee from India in the year under consideration as it was in AYs 2014-15 up to AY 2021-22. Under such factual background, it is noted by the Ld. AO that the assessee has made submissions regarding, why the income from journals subscription and CAS subscription to database should not be treated as income from royalty or FIS (Fees for included Services). The assessee has furnished elaborate submission qua the following services:  Fee for providing access to online chemistry databases (CAS division)  Subscription revenue from sale of online journals (PUBS division)  Fee for memberships (M&SA division)

ITA No. 1167/Mum/2026 ITA No. American Chemical Society American Chemical Society 5. The assessee, being aggrieved had raised an objection before the Ld. The assessee, being aggrieved had raised an objection before the Ld. The assessee, being aggrieved had raised an objection before the Ld. Dispute Resolution Panel (in short, “the DRP”) against the aforesaid draft Dispute Resolution Panel (in short, “the DRP”) against the aforesaid draft Dispute Resolution Panel (in short, “the DRP”) against the aforesaid draft assessment order. The DRP has pass assessment order. The DRP has passed an order u/s 144C(5) of the Act on ed an order u/s 144C(5) of the Act on 21.11.2025, wherein the objections of assessee were considered, however were wherein the objections of assessee were considered, however were wherein the objections of assessee were considered, however were not found to be satisfactory, therefore had decided the issue against the assessee not found to be satisfactory, therefore had decided the issue against the assessee not found to be satisfactory, therefore had decided the issue against the assessee under the following observations and findings: under the following observations and findings: “20.6.2 Discussion of the DRP: cussion of the DRP: In the scheme of DRP proceedings, an applicant assessee can file objections before the In the scheme of DRP proceedings, an applicant assessee can file objections before the In the scheme of DRP proceedings, an applicant assessee can file objections before the DRP in respect of any proposed variations prejudicial to its interest. However, this DRP in respect of any proposed variations prejudicial to its interest. However, this DRP in respect of any proposed variations prejudicial to its interest. However, this matter pertains to correction of adopted income. There is a clai matter pertains to correction of adopted income. There is a claim of an error apparent m of an error apparent on record. The Ld. A.O, has not given any view on this issue, nor has made any on record. The Ld. A.O, has not given any view on this issue, nor has made any on record. The Ld. A.O, has not given any view on this issue, nor has made any separate addition, In considered opinion of this Panel, such issues pertaining to correction/updation of In considered opinion of this Panel, such issues pertaining to correction/updation of In considered opinion of this Panel, such issues pertaining to correction/updation of figures are amenable to proceedings u/section 154 figures are amenable to proceedings u/section 154 ofthe Income Tax Act, 1961 before ofthe Income Tax Act, 1961 before the appropriate authority, the Assessing Officer. the appropriate authority, the Assessing Officer. 20.6.3 Directions of the DRP: 20.6.3 Directions of the DRP: The objection of the applicant is disposed accordingly. The Ld. Assessing Officer is The objection of the applicant is disposed accordingly. The Ld. Assessing Officer is The objection of the applicant is disposed accordingly. The Ld. Assessing Officer is directed to adopt the correct income. The Applicant may directed to adopt the correct income. The Applicant may move a rectification move a rectification application u/section 154 of the Income Tax Act, 1961 with statement of all facts application u/section 154 of the Income Tax Act, 1961 with statement of all facts application u/section 154 of the Income Tax Act, 1961 with statement of all facts andclaims, with evidence before Assessing Officer. andclaims, with evidence before Assessing Officer. 21. Subject to the above discussion, the total income of the assessee is computed as 21. Subject to the above discussion, the total income of the assessee is computed as 21. Subject to the above discussion, the total income of the assessee is computed as under:-

ITA No. 1167/Mum/2026 American Chemical Society 7. At the outset, Ld. Authorized Representative (in short, “Ld. AR”) of the assessee submitted that the issue herein is squarely covered by the decision of Hon’ble ITAT in assessee’s own case for AY 2022-23 in ITA No.1603/Mum/2015, therefore, in absence of any decision contrary to the findings of ITAT and as noted by the Ld. AO in its order itself that there is no change in the income of the assessee including the business model and the activities, thus the decision of ITAT squarely applies in the present case also wherein the assessee has raised the identical grounds, as were raised in the aforesaid ITA for AY 2022-23.

ITA No. 1167/Mum/2026 American Chemical Society 1160/Mum/2024 for assessment year 2013-14 in favour of the assessee and therefore, in view of principle of consistency without any change of facts and circumstances, the Ld. Assessing Officer/DRP is not justified in upholding addition for treating the subscription charges under chemical abstract division and publication division as royalty. We find that the Tribunal in assessment year 2014-15 has specifically noted that considerationreceived from 'copyrighted article' is different from 'copyright' and therefore, same does not quality as 'royalty'. The relevant finding of the Tribunal (supra) is reproduced as under: "17. We have heard the rival submissions and perused the relevant material on record including the order of the lower authorities on the issue in dispute. We find that issue with respect to the PUBS division coincides with the issues on the CAS fee. The journal provided by the PUBS division do not provide any information arising from assessee's previous experience. The assessee's experience lies in the creation of/maintaining such information online. By granting access to the journals, the assessee neither shares its experiences, techniques or methodology employed in evolving databases with the users, nor imparts any information relating to them. As is clearly evident from the sample agreements, all that the customers get is the right to search, view and display the articles (whether online or by taking a print) and reproducing or exploiting the same in any manner other than for personal use is strictly prohibited. Further, the customers do not get any rights to the journal or articles therein. They can only view the article in the journal that they have subscribed to and cannot amend or replicate or reproduce the journal. Thus, the customers are only able to access journal/articles for personal use of the information. No use or right to use' in any copyright or any other intellectual property of any kind is provided by the assessee to its customers. Furthermore, the information resides on servers outside India, to which the customers have no right or access, nor do they possess control or dominion over the servers in any way. Therefore, the question of such payments qualifying as consideration for use or right to use any equipment, whether industrial, commercial or scientific, does not arise. 18. To put a comparison, if someone purchases a book, then the consideration paid is not for the use of the copyright in the book/ article. The purchaser of a book does not acquire the right to make multiple copies for re-sale or to make derivative works of the book, i.e., the purchaser of a book does not obtain the copyright in the book. Similarly, thepurchaser of the assessee's journals, articles or database access does not have the right to make copies for re-sale and does not have the right to make derivative works. In short, the purchaser has not acquired the copyright of the article or of the database. What the buyer gets is a copyrighted product, and accordingly the consideration paid is not royalty, but for purchase of a product. In the instant case too, what is acquired by the customer is a copyrighted article, copyrights of which continue to lie with assessee for all purposes. It is a well settled law that copyrighted article is different from a copyright, and that consideration for the former, ie. a copyrighted article does not qualify as royalties. 19. Thus, the principles noted by us in the earlier part of this order in the context of the income earned by way of CAS fee are squarely applicable to the subscription revenue received from customers of PUBS division for sale of journal also, and accordingly PUBS fee also does not qualify as 'Royalty' in terms of section 9(1)(vi) of the Act as well as Article 12(3) of the India-USA DTAA."

ITA No. 1167/Mum/2026 American Chemical Society 2.1 Further, in assessment year 2013-14, the Tribunal followed the finding of the Co- ordinate Bench in assessment year 2014-15. The relevant finding in assessment year 2013-14 is reproduced as under: "10. The aforesaid order so passed by the Coordinate Bench has since been consistently followed by the Coordinate Benches while adjudicating the matter for subsequent assessment years right up to A.Y 2021-22. As we have noted in the beginning, the AO has also stated in the assessment order that assessee's business model has remained the same in comparison to A.Y. 2014-15 to Α.Υ. 2020-21 and stream of revenue was also the same and no other income has been earned by the assessee company from India. Thus, admittedly and undisputedly, there are no changes in the facts and circumstances of the case in the impugned assessment year except that the matter was reopened u/s 147 of the Act. Though the Revenue has challenged the orders so passed by the Coordinate Benchesbefore the Hon'ble Bombay High Court and the matter is currently pending adjudication, however, there is no stay which has either been sought or granted against the orders so passed by the Coordinate Benches. Given that there are no changes in the facts and circumstances of the case, we see no reason to deviate from the view so taken by the Coordinate Bench which has consistently been followed in subsequent years. In light of the same, we uphold the plea so taken by the Id AR on behalf of the assessee and hold that subscription revenues for CAS as well as PUBS divisions cannot be brought to tax as royalty in terms of section 9/1)(vi) as well as Article 12(3) of India-USA DTAA in the hands of the assessee and the addition so made is hereby directed to be deleted. 11. In light of the aforesaid, where we have deleted the addition, other grounds raised by the assessee including the ground challenging the jurisdiction of the AO have become academic in nature and we donot deem it and the adjudicate necessary to same are left open. the same 2.2 As facts and circumstances in the year under consideration being identical, without there being any material change, following the principle of consistency and respectfully following the Co-ordinate Bench of the Tribunal, we hold that subscription charges received under chemical abstract service division and publication division are not in the nature of royalty under the provisions of the Income-tax Act or under the provisions of the India US DTAA. Accordingly, the issue in dispute raised in the grounds of appeal of the assessee is allowed. 3. In the result, the appeal of the assessee is allowed.” 10. In view of aforesaid facts, circumstances and decision of ITAT in assessee’s own case on identical issue having similar facts and circumstances, except the quantum of addition, wherein the Tribunal has held that the subscription charges received under Chemical Abstracts Service Division and

ITA No. 1167/Mum/2026 American Chemical Society Public Division does not qualify as royalty in terms of Section 9(1)(vi) of the Act as well as Article 12(3) of the India-US DTAA.

Order pronounced in the open court on 10-08-2026.

Sd/- Sd/- (ANIKESH BANERJEE) (ARUN KHODPIA) JUDICIAL MEMBER ACCOUNTANT MEMBER

Mumbai, Dated : 10-08-2026. Ankit K., Sr. PS

ITA No. 1167/Mum/2026 American Chemical Society Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. Guard File 5. CIT

BY ORDER,

(Dy./Asstt. Registrar) ITAT, Mumbai