The case involves RELX Inc., a corporation based in Gurgaon, and the Assistant Commissioner of Income Tax (ACIT), Circle International Tax 3(1)(1), New Delhi, concerning the classification of income received from subscription fees during the assessment year 2019-20.
Case Number: ITA 1876/DEL/2022
Appellant: RELX Inc, Gurgaon
Respondent: ACIT, Circle Int Tax 3(1)(1), New Delhi
Assessment Year: 2019-20
Order Type: Final Tribunal Order
Date of Order: 2023-04-05
Pronounced On: 2023-04-05
The primary issue at hand was whether the subscription fees received from Indian customers by RELX Inc. should be treated as Fees for Technical Services (FTS) or as business profits exempt from taxation under the India-USA Double Taxation Avoidance Agreement (DTAA).
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, decided in favor of RELX Inc., indicating that the fees received are not in the nature of technical services but constitute business profits. Since RELX Inc. does not have a Permanent Establishment (PE) in India, the profits are not taxable in India under the DTAA.
This judgment is significant as it clarifies the tax obligations related to subscription-based revenues from digital databases like Lexis Nexis, which RELX Inc. provides. It supports the position that without a PE, business profits generated by foreign entities from digital services are not taxable in India, fostering a favorable business environment for international digital service providers.
The case also highlights the complexities and nuances of tax treaties and their application to digital services, which are increasingly becoming a focal point in international tax law.
Order pronounced in the open court on 05/04/2023 by Dr. B. R. R. Kumar, Accountant Member, and Shri Yogesh Kumar U.S., Judicial Member of the ITAT.
RELX Inc. vs ACIT: Subscription Fees Dispute and Tax Implications for 2019-20
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