EDENRED PTE LTD ,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX, INTERNATIONAL TAXATION -2(2)1, MUMBAI
Income Tax Appellate Tribunal, “I” BENCH, MUMBAI
Before: SHRI AMIT SHUKLA, JM & MS PADMAVATHY S, AM
Per Padmavathy S, AM:
This appeal by the assessee is against the final order of assessment passed by the Deputy Commissioner of Income Tax (IT), Circle-2(2)(1), Mumbai (in short "AO") passed under section 143(3) r.w.s. 144C(13) of the Income Tax Act
1961 (the Act) dated 16.10.2023 for assessment year (AY) 2021-22. The assessee raised the following grounds of appeal –
2 ITA No.4334/Mum/2023- Edenred Pte Limited
“1. General Ground
Erred in assessing total income at INR 7,89,36,917/- as against returned income of Nil.
Infrastructure Data Center charges taxed as Royalty The Assessing Officer ('AO') has erred in considering Infrastructure Data Centre charges of INR 6,18,41,635/-taxable as Royalty under the India Singapore Double Taxation Avoidance Agreement ('DTAA').
Trade & Consumer CRM System Development charges taxed as Royalty The AO has erred in considering Trade & Consumer CRM System Development charges of INR 43,31,546/- taxable as Royalty under the India - Singapore DTAA.
Other service charges taxed as Royalty The AO has erred in considering Other Service Charges (Referral Fees) of INR 6,86,556/- taxable as Royalty under the Act as well as under the India Singapore DTAA.
Management Service Fees taxed as Royalty a) The AO has erred in considering Management Service Fees of INR 85,81,894/- taxable as Royalty under the Act as well as under the India - Singapore DTAA. b) On identical facts and circumstances in previous years where Management Service Fees has been taxed as Fees for Technical Services under the India-Singapore DTAA, the AO has erred in changing his opinion with respect to the same nature of receipts. c) The Dispute Resolution Panel erred in directing the AO to follow its Directions of AY 2018-19 & AY 2019-20 for taxing Management Service fees as Royalty in view of the fact that the appellant was not in receipt of such services during AY 2018-19 & AY 2019-20. 6. Member Login Fee taxed as Royalty The AO has erred in considering Member Login Fee of INR 34,95,286/- taxable as Royalty under the Act as well as under the India - Singapore DTAA.
The appellant craves leave to add, alter, and supplement any ground or grounds, if necessary at the time of hearing of the appeal.”
3 ITA No.4334/Mum/2023- Edenred Pte Limited
2. The assessee is a company incorporated in and tax resident of Singapore.
Assessee is engaged in the business of provision of services relating to developing, marketing and implementing incentive base strategies and technologies to build loyalty and to reward long term relationships through the utilization of internet, wireless technology and offline solutions to its clients. The assessee filed the return of income for AY 2021-22 on 10.03.2022 declaring total income of NIL.
The case was selected for scrutiny and the statutory notices were duly served on the assessee. During the year under consideration, the assessee received the following receipts from the companies incorporated in India namely Edenred
(India) Pvt. Ltd., Accentiv India Pvt. Ltd. and claimed the same as not taxable as per Article-12 of the India Singapore DTAA
Sr.No.
Particulars
Amount (In Rs.)
1
Infrastructure data Centre Charges (IDC)
6,18,41,635
2
Other Service Charges (Referral Fees)
6,86,556
3
Management Service Fees
85,81,894
4
Trade & Consumer CRM System Development
43,31,546
5
Member Login Fees
34,95,286
Total Income
7,89,36,917
The Assessing Officer (AO) treated the above receipts as Royalty and accordingly made addition by applying 10% of gross receipts. The assessee raised further objections before the DRP and the DRP confirmed the additions. The assessee is in appeal against the final order of assessment passed by the AO pursuant to the directions of the DRP.
Infrastructure Data Centre (IDC) Services & Consumer CRM Development
Charges.
The assessee has entered into IDC Agreement with its Indian Group Companies for providing IDC Services in the nature of IT Infrastructure
4 ITA No.4334/Mum/2023- Edenred Pte Limited
Managements and Mail box and website posting services. During the year under consideration, the assessee has received a sum of Rs. 61,84,163/- and Rs.
43,31,546/- towards rendering of these services from the Indian Group Companies.
The AO held the receipt as Royalty by placing reliance on the directions the DRP in assessee's own case for AY 2018-19 and 2019-20. The AO also held that the impugned receipts are to be treated as income by way of Royalty within the meaning of section 9(1)(vi) of the Act. The DRP rejected the objections filed by the assessee and the AO passed the final assessment order following the directions of the DRP.
The ld. AR submitted that this is the recurring issue and that the Co-ordinate Bench has been consistently holding the issue in favour of the assessee. The ld. AR further submitted that the facts for the year under consideration being identical, the issue stands covered by the decision of earlier years.
The ld. DR placed reliance on the order of the lower authorities.
We have heard the parties and perused the material on record. We notice that the Co-ordinate Bench in assessee's own case for AY 2019-20 (ITA No. 1562/Mum/2022 dated 29.12.2022) has considered a similar issue where it has been held that “9. We have considered the rival submissions and perused the material available on record. We find that the coordinate bench of the Tribunal in assessee’s own case in Edenred Pte Ltd. vs DCIT, in ITA No. 6267/Mum./2019, vide order dated 22/09/2021, for the assessment year 2016–17, decided similar issue in favour of assessee by following the judicial precedents rendered in assessee’s own case. The relevant findings of the coordinate bench of the Tribunal, in the aforesaid decision, are as under:
5 ITA No.4334/Mum/2023- Edenred Pte Limited
“4. Having considered rival submissions and perused facts on record, we find that the first issue as raised in ground 3 relates to taxability of infrastructure data centre (IDC) charges as royalty. As submitted by both the parties, this is a recurring dispute between the parties since assessment year 2010-11. In the latest order passed for assessment years 2014-15 and 2015-16, the Tribunal has deleted the addition with the following observations:-
“7. We have considered rival submissions and perused materials on record.
Pertinently, identical issue relating to taxability of IDC charges as royalty came up for consideration before the Tribunal in assessee's own case in assessment years 2010-11, 2011-12 and 2012-13 in ITA No.l718/Mum/2014
& others dated 20-07-2020, The Tribunal, while deciding the issue has held, as under:-
"6. We have heard the rival submissions and perused the relevant materials on record. The reasons for our decisions are given below.
We find that (i) under the said IDC agreement, the appellant, essentially provides IT infrastructure management and mail box/website hosting services to its India group companies; these IDC services are performed by the appellant's personnel in Singapore; the Indian group companies directly remit IDC service payments towards the appellant's bank account in Singapore, (it) IDC is an ISO 27001 certified data centre owned by Edenred Pte. and located in Singapore; IDC services are provided using the IDC and IT/security team in Singapore, (Hi) the services under the IDC agreement comprise of administration and supervision of central infrastructure; mailbox hosting services and website hosting services, (iv)
IDC services ensure 100% uptime for critical external facing applications which need highly secured web environment and dedicated team of security experts to ensure 100% uptime Edenred Pte Ltd. 11 ITA Nos. 1718/M/2014,
254/M/2015 & 507/M/2016 of security systems (firewall, antivirus, access controls) which are also hosted on server in Singapore.
We further observe that examples of websites/applications/softwares hosted by Indian group companies on the data centre in Singapore are web ordering application, corporate website, websites created for customers of Edenred India entities while making o loyalty program for them.
A perusal of the documents filed before the AO and DRP clearly indicate that (i) appellant has an infrastructure data centre, not information centre at Singapore, (H) the Indian group companies neither access nor use CPU of the appellant, (Hi) no CDN system is provided under the /DC agreement, no such use/access is allowed, (iv) the appellant does not maintain any such 6 ITA No.4334/Mum/2023- Edenred Pte Limited central data (v) IDC is not capable of information analytics, data management, (vi) appellant only provides IDC service by using its hardware/security devices/personnel ; all that the Indian group companies received are standard IDC services and not use of any software, (vii) bandwith and networking infrastructure is used by the appellant to render
IDC services; Indian companies only get the output of usages of such bandwith and network and not its use, (viii) consideration is for IDC services and not any specific program and (ix) no embedded/secret software is developed by the appellant.
Against the above factual backdrop, let us discuss below the cose laws relied on both sides.
1 We begin with the case laws relied on by the id. counsel. A plethora of precedents on the subject in which we are presently concerned compels us, in order to avoid prolixity, to refer only a few decisions below.
Edenred Pte Ltd. 12 ITA Nos. 1718/M/2014 254/M/2015 & 507/M/2016 In the case of Bharati Axa General Insurance Co. Ltd. (supra), the appellant, an Indian company carrying on business of general insurance entered into o service agreement with a Singapore company AXA ARC for receiving assistance such as business support, market information, technology support services and strategy support etc. from the tatter. The AAR held that (i) though the services rendered by AXA ARC may well be brought within the scope of the definition of FTS under the IT_Act_ as they answer the description of consultancy services or some of them may be categorized as technical services but the qualifying words "make available technical knowledge, experience, skill, know-how, which enables the recipient of services to apply the technology contained therein" in ArUde_12A of the DTAA make material difference, (ii) all technical or consultancy services cannot be brought within the scope of this definition unless they make available technical knowledge, knowhow etc. which in turn facilitates the person acquiring the services to apply the technology embedded therein, (Hi) services provided by AXA ARC to the applicant do not fulfill the requirements of the definition of FT5 in the DTAA, (iv) even assuming that they are technical or consultancy services, it cannot be said that the applicant receiving the services is enabled to apply the technology contained therein, (v) also there is nothing in the IT support services that answers the description of technical services as defined in the DTAA, (vi) therefore, the fees paid to AXA ARC by the applicant does not amount
7 ITA No.4334/Mum/2023- Edenred Pte Limited to fees for technical services within the meaning of the DTAA, (vii) as regards the payments made for providing access to software applications and to the server hardware system hosted in Singapore for internal purposes and for availing of related support services under the terms of the service agreement, same cannot be brought within the scope of the definition of Edenred Pte Ltd. 13 ITA Nos. 1718/M/2014
254/M/2015& 507/M/2016 'royalty' in Article 12.3, (viii) there is no transfer of any copyright in the computer software provided by AXA
ARC and it cannot be said that the applicant has been conferred any right of usages of the equipment located abroad, more so, when the server is not dedicated to the applicant.
Similarly, in the case of Standard Chartered Bank (supra), the assesses bank entered into an agreement with a Singapore company SPt, for the provision of data processing support for its business in India and that data processing is down outside Indict. Application software by which data is transmitted to hardware at Singapore and processed by SPL at Singapore is owned by the assessee. Thus what is used by the appellant is the computer hardware owned by SPL. The Tribunal held that (i) payment in question can be said to be a payment for a facility which is available to any person wilting to use the facility, (ii) system software which is embedded in the computer hardware by which the computer hardware functions is not owned by SPL and SPL only has a license to use the system software ; (in) consideration received by SPL is for using the computer hardware which does not involve use or right to use a process, (iv) there is nothing on record to establish that the hardware could be accessed and put to use by the assesses by means of positive acts, (v) therefore, it cannot be said that the payment by the assessee to SPL is royalty within the meaning of Article 12 of the treaty.
In ExxonMobi Company India (P.) Ltd. (supra), the assessee had paid certain amount to 'EMCAP', Singapore towards global support fees.
The AO opined that payment made by the assessee was in the nature of FTS as defined in Explanation 2 to sectiorj 9(1)(vii) of the Act. The Tribunal observed that as per terms of agreement, EMCAP had to provide management consulting, Edenred Pte Ltd. 14 ITA Nos.
1718/M/2014
254/M/2015&
507/M/2016
functional advice, administrative, technical, professional and other supporting services to the assesses; however, there was nothing in agreement to conclude that in course of such provision of service, EMCAP had made available any technical knowledge, experience, skill, knowhow or process which enabled ossessee to apply technology contained therein on its own. Therefore, the Tribunal held that payment made by the 8 ITA No.4334/Mum/2023- Edenred Pte Limited ossessee could not be considered as FTS as defined under Article
12(4)(b) of the India-Singapore DTAA.
In M/s Reliance Jio Infocomm Ltd. (supra) for AY 2016-17, the Tribunal observes that though the India-Singapore Tax Treaty is amended by Notification No. SO 935(E) dated 23.03.2017, however, the definition of 'royalty' therein has not been tinkered with and remains as such.
2 Now we turn to the case taws relied on by the id, DR. In the case of Cargo Community Network (P.) Ltd. (supra), the assesses, a nonresident company has its registered office at Singapore. It is engaged in the business of providing access to an internet based air cargo portal known as Ezycargo at Singapore. The applicant received payments from an Indian subscribers for providing password to access and use the portal hosted from Singapore. The AAR held that payments made for concurrent access to utilize the sophisticated services offered by the portal would be covered by the expression royalty.
We find that subsequently, after considering the decision in Cargo
Community Network (P.) Ltd. (supra), Mumbai ITAT in the case of Standard Chartered Bank 11 ITR 721 and Yahoo India Pvt. 140 TTJ
195 held that no part Edenred Pte ltd. 15 ITA Nos. 1718/M/2014
254/M/2015& 507/M/2016 of the payment could be said to be for use of specialized software on which data is processed as no right or privilege was granted to the company to independently use the computer.
In the case IMT Labs (India) (P.) Ltd. (supra), the assessee, on Indian company, entered into an agreement with a non-resident American company for securing license of a particular software, which the applicant is entitled to use. The applicant has to pay license fee for usage of software to the American company. The AAR held that 'Smarterchild' application software on the American company's server platform is scientific equipment licensed to be used for commercial purposes and therefore, payments made for producing and hosting
'Interactive Agent' applications would be covered by the expression
'royalties' as used in Artjcfe_I2. However, we find that in the instant case, appellant only provides service by using its hardware/security devices/personnel and not use
9 ITA No.4334/Mum/2023- Edenred Pte Limited of any software and therefore the above case is distinguishable from the present appeal.
In ThoughtBuzz (P.) Ltd. (supra), the applicant, a Singapore company was engaged in providing social media monitoring service for a company, brand or product. It was a platform for users to hear and engage with their customers, brand ambassadors etc. across the internet. The applicant offered service on charging a subscription.
The clients, who subscribe, can login to its website to do a search on what is being spoken about various brands and so on. The AAR held that the amount received from offering the particular Edenred Pte Ltd.
16 IT A Nos. 1718/M/2014 254/M/2015& 507/M/2016 subscription based service is taxable in India as 'royalty' in terms of paragraph 2
of Article 12 of the DTAC between India & Singapore.
However, we find that in the instant case, the appellant is only providing IDC service which includes administration and supervision of central infrastructure, mailbox hosting services and website hosting services and therefore, the ratio laid down in the above ruling is not applicable to the facts of the appellant's case.
3 From the enunciation of law in Bharati Axa General Insurance Co. Ltd; ExxonMobil Company India (P.) Ltd; Standard Chartered Bank v. DOIT; DCIT v. M/s Reliance Jio Infocomm Ltd narrated at para 6.1 hereinbefore, it is quite iuculent that revenues under the IDC agreement ought not to be taxed in the hands of the appellant as royalty under the Act and/or India-Singapore DTAA. Therefore, we delete the addition of Rs.95,62,479/- made by the AO towards IDC charges and allow the 2nd ground of appeal."
Facts being identical, respectfully following the aforesaid decision of the coordinate bench, we hold that IDC charges received by the assessee is not in the nature of royalty. Accordingly, additions are deleted. Ground 2 in both the appeals are allowed.”
There being no difference in the factual position in the impugned assessment year, respectfully following the earlier decisions of the Tribunal in assessee‟s own case, we delete the addition. This ground is allowed.”
We find that this issue is recurring in nature and has been decided in favour of the assessee by the decision of the coordinate bench of the Tribunal for the preceding assessment years. The learned DR could not show us any reason to deviate from the aforesaid decision and no change in facts and law
10 ITA No.4334/Mum/2023- Edenred Pte Limited was alleged in the relevant assessment year. Thus, respectfully following the order passed by the coordinate bench of the Tribunal in assessee’s own case cited supra, we uphold the plea of the assessee and direct the AO to delete the addition on account of IDC charges. As a result, ground No. 2 raised in assessee’s appeal is allowed.”
For the year under consideration the ld. DR did not bring any new material on record for us to deviate from the above findings of the Co-ordinate Bench. Therefore, respectfully following the above order of the Co-ordinate Bench in assessee's own case, we note that the IDC and CRM Development Charges are not taxable in India and accordingly direct the AO to delete the addition made in this regard. Grounds 2 & 3 raised by the assessee are allowed.
Other Services Charges taxed as Royalty
During the year under consideration the assessee has received Rs. 6,86,556/- as other service fees as per the agreement with M/s Accentiv (India) Pvt. Ltd. The AO treated the said amount as Royalty which is confirmed by the DRP.
We have heard the parties and perused the material on record. We notice that the impugned issue is recurring in nature and that the Co-ordinate Bench while considering the same for AY 2019-20 have held that “13. Having considered the submissions of both sides and perused the material available on record, we find that the coordinate bench of the Tribunal in assessee’s own case in Edenred Pte Ltd. (supra), for the assessment year 2016–17, decided similar issue in favour of the assessee by following the judicial precedents rendered in assessee’s own case. The relevant findings of the coordinate bench of the Tribunal, in the aforesaid decision, are as under:
“6. In ground 3, assessee has challenged the addition of other service charges (referral fee) as royalty. As could be seen, identical issue came up for consideration in assessee‟s own case in the preceding assessment
11 ITA No.4334/Mum/2023- Edenred Pte Limited years. In the latest order passed for the assessment years 2014-15 and 2015-16 (supra), the Tribunal has deleted the addition with the following observations:-
“23. We have considered rival submissions and perused materials on record. It is observed that identical issue came up for consideration before the Tribunal in assessee's own case in assessment year 2010-11,
2011-12 and 2012-13. While deciding the issue, the Tribunal, negating the stand of the departmental authorities held as under:-
"12. We have heard the rival submissions and perused the relevant materials on record. The reasons for our decisions ore given below.
In the instant case, the appellant has received fees for referral services/other services of Rs.39,94,209/-from Surf Gold in the year under consideration.
It is relevant to mention here that as per the India-Singapore
DTAA, the services in the nature of managerial, technical or consultancy nature are taxable as FTS, if such services are 'made available' to the service recipient. In the instant case, referral services/other services are provided to support Surf Cold in carrying on its business. These services do not make available any technical knowledge, skill, knowhow or processes to Surf Gold because there is no transmission of the technical knowledge, experience, skill etc.
from the appellant to Surf Gold or its clients.
In the case of Cushman & Wakefield (S) Pte. Ltd. (supra), the applicant a foreign company based in Singapore is engaged in the business of rendering real estate services to its local and international clients. The applicant has developed certain international client relationships and in accordance with Edenred
Pte Ltd. 29 ITA Nos. 1718/M/2014 254/M/2015& 507/M/2016
global policy of the group, various offices provide referral services to other Cushman & Wakefield (C&W) Offices. The applicant entered into a referral agreement with Indian group company whereby the applicant refers/recommends potential customers desirous of obtaining real estate consulting and associated services in India, Further the applicant was not responsible for persuading the customers to avail the services of the Indian group company, nor negotiating or collecting fee charged by Indian group company
12 ITA No.4334/Mum/2023- Edenred Pte Limited from the referred customers. As consideration for such referral services, a percentage of the amount realized from the referred customers (i.e. 30% on gross amount realized) was paid to the applicant. The AAR held that "referral fee received in Singapore by the applicant, a Singaporean company from an Indian company for referring customers to the latter is neither business income u/s 9{l)(i) nor royalty u/s 9(l)(vi) nor fee for technical services u/s 9(l)(vii) r. w. Article 12(4)(b) of the DTAA between India &
Singapore and, therefore, it is taxable as business income in Singapore only as the applicant has no PE in India; impugned receipt not being chargeable to tax under the provisions of the IT Act or under the provisions of DTAA, section 195 is not attracted".
In Real Resourcing Ltd. (supra), the AAR, in the context of the India-UK DTAA, after relying on the Cushman & Wakefield Ruling
(supra) held that referral fee received by a UK company
(applicant) from India based recruitment agency for referring potential Indian clients and candidates was not royalty or FTS. The relevant observations of the AAR in the context of Article 13
dealing with royalty/FTS is as under:
Edenred Pte Ltd. 30 ITA Nos. 1718/M/2014 254/M/2015&
507/M/2016 "10. Collecting data and analyzing it and making a database for providing information on suitable candidates for recruitment, even if they are in the nature of consultancy services, cannot be considered to be ancillary and subsidiary to the enjoyment/application of the right or information referred to in para 3(a). Moreover, by access to the database, it cannot be said that the information concerning industrial, commercial or scientific experience will be transmitted by the applicant to the recruiting agencies. If the contention of Revenue is accepted, it would amount to unwarranted expansion of the terms FTS and royalties.
Consideration for providing information concerning industrial, commercial or scientific experience basically involves the sharing of technical know-how and experience which is not the case here........
We do not think that the criterion envisaged by art. 13.4(a) of DTAA has been satisfied in the instant case."
In Knight Front (India) (P.) Ltd. (supra), the Tribunal held that (i) where referral fees was received by foreign concern for introducing clients to assessee-Indian company, providing international real
13 ITA No.4334/Mum/2023- Edenred Pte Limited estate advisory and management services, since referral services were rendered entirely outside India, it would not fall within the scope of 'total income' of so id foreign concern as per section5(2) and (ii) referral fees paid by assesseeIndian company for availing referral services which were rendered by foreign concern entirely in USA would constitute business profits of foreign company under Article 7 of the India-USA DTAA; in absence of PE in India, it was not taxable in India.
The distillation of precedents must now be applied by us to the facts of the present case. We are of the considered view that in the context of the above factual scenario and position of law, the revenues under the referral Edenred Pte
Ltd. 31 ITA Nos. 1718/M/2014 254/M/2015 & 507/M/2016
agreement is not taxable in the hands of the appellant as royalty under the Act and/or India-Singapore DTAA or FTS under the India-Singapore DTAA, Therefore, we delete the addition of Rs.39,94,209/- made by the AO towards referral fee and allow the 4th & 5th ground of appeal."
Identical view was expressed by the Tribunal while deciding the issue again in assessee's own case in assessment year 2013-14 in ITA No.2178/Mum/2017 dated 23- 10-2020. 25. Facts being identical, respectfully following the decisions of the Tribunal in assessee's own case as referred to above, we hold that referral fee received by the assessee is not in the nature of royalty. Accordingly, addition made in both the assessment years under dispute is deleted. Respective ground is allowed.”
There being no difference in factual position in the impugned assessment year, respectfully following the earlier decision of the Tribunal as referred to above, we delete the addition. This ground is allowed.”
We find that this issue is recurring in nature and has been decided in favour of the assessee by the decision of the coordinate bench of the Tribunal for the preceding assessment years. The learned DR could not show us any reason to deviate from the aforesaid decision and no change in facts and law was alleged in the relevant assessment year. Thus, respectfully following the order passed by the coordinate bench of the Tribunal in assessee’s own case cited supra, we uphold the plea of the assessee and direct the AO to delete the 14 ITA No.4334/Mum/2023- Edenred Pte Limited addition on account of other service charges (referral fees). As a result, ground No. 3 raised in assessee’s appeal is allowed.”
The Revenue did not bring any new material on record for us to deviate from the decision rendered by the Co-ordinate Bench in above case of the assessee. Thus, respectfully following the order passed by the Co-ordinate Bench in assessee's own case, we direct the AO to delete the addition made towards other service charges. Ground No.4 raised by the assessee is allowed.
Management Service Fee taxed as Royalty
During the year under consideration assessee has received as sum of Rs. 85,81,894/- as Management Service Fee from the Indian Group Company as per the agreement entered into by the assessee. The AO treated the impugned amount as Royalty as per section 9(1)(vi) of the Act r.w.Article-12 of the DTAA between India and Singapore.
We have heard the parties and perused the material on record. We notice that an identical has been considered by the Co-ordinate Bench in assessee's own case for AY 2010-11 to AY 2013-14 has considered similar issue and held the same in favour of the assessee. For the year under consideration the revenue did not bring any new material on record and therefore, respectfully following the decision of the Co-ordinate Bench, we direct the AO to delete the addition made in this regard. Ground No.5 raised by the assessee is allowed.
Member Login Fees
The AO treated an amount of Rs. 34,95,286/- received by the assessee towards Member Login Fees as Royalty and accordingly held the same to be taxable in India in the hands of the assessee.
15 ITA No.4334/Mum/2023- Edenred Pte Limited
15. We have heard the parties and perused the material on record. An identical issue has been considered by the Co-ordinate Bench in assessee's own case for AY
2019-20 where it has been held that “17. Having considered the submissions of both sides and perused the material available on record, we find that the coordinate bench of the Tribunal in assessee’s own case in Edenred Pte Ltd. (supra), for the assessment year 2016–17, decided similar issue in favour of the assessee by following the judicial precedent rendered in assessee’s own case. The relevant findings of the coordinate bench of the Tribunal, in the aforesaid decision, are as under:
“8. In ground 5, the assessee has challenged the addition of member login fee as royalty. Pertinently, identical issue came up for consideration in assessee‟s own case in assessment year 2015-16. While deciding the issue, the Tribunal deleted the addition with the following observations:-
“30. We have considered rival submissions and perused materials on record. It is observed that the assessee merely provides a standard facility to the Indian entity without granting any exclusive right in respect of any copyright, process, etc. It is further relevant to observe, learned DRP, while deciding the issue has clearly and categorically observed that member login services are similarly to IDC services. If that is the factual position, the member login fee cannot be treated as royalty since, while deciding assessee's appeal challenging the taxability of fees received towards IDC services, the Tribunal has consistently expressed the view that the services cannot be treated as royalty under the India-Singapore Tax treaty. In aforesaid view of the matter, we hold that member login fee is not in the nature of royalty under the treaty provision. Accordingly, addition is deleted. This ground is allowed.”
There being no difference in factual position in the impugned assessment year, respectfully following the earlier decision of the Tribunal as referred to above, we delete the addition. This ground is allowed.”
We find that this issue is recurring in nature and has been decided in favour of the assessee by the decision of the coordinate bench of the Tribunal for preceding assessment years. The learned DR could not show us any reason to deviate from the aforesaid decision and no change in facts and law was alleged in the relevant assessment year. Thus, respectfully following the order
16 ITA No.4334/Mum/2023- Edenred Pte Limited passed by the coordinate bench of the Tribunal in assessee’s own case cited supra, we uphold the plea of the assessee and direct the AO to delete the addition on account of member login fees. As a result, ground No. 4 raised in assessee’s appeal is allowed.”
The ld. DR during the course of hearing did not bring any new material on record for us to take a different view and therefore respectfully following the above decision of the Co-ordinate Bench, we direct the AO to delete the addition made in this regard.
Ground No. 1 being general does not warrant a separate adjudication.
In result the appeal of the assessee is allowed.
Order pronounced in the open court on 28-03-2025. (AMIT SHUKLA) (PADMAVATHY S)
Judicial Member Accountant Member
*SK, Sr. PS
Copy of the Order forwarded to :
1. The Appellant
2. The Respondent
3. DR, ITAT, Mumbai
4. 5. Guard File
CIT
BY ORDER,
(Dy./Asstt.