SPRINGER NATURE CUSTOMER SERVICE CENTER GMBH,GERMANY V. ACIT, CIRCLE- 3(1)(2) INT. TAXATION, DELHI

ITA 973/DEL/2025

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The case involves Springer Nature Customer Service Centre GmbH, a German company, appealing against the assessment order by the Assistant Commissioner of Income-tax, which treated certain commission and subscription incomes as FTS, thus chargeable to tax in India. The Tribunal examined whether the commission income from affiliated publishers and subscription fees from customers qualify as FTS under the Act and DTAA. The Tribunal relied on previous rulings by the Delhi High Court and the ITAT in favor of the assessee, which held that such incomes do not constitute FTS as they do not involve managerial, technical, or consultancy services as defined under the relevant tax laws and agreements.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 840624 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2022-2023
• Appeal Filed On: 20-02-2025
• Other Referred Cases: Skycell Communications Ltd. v. Deputy Commissioner of Income-Tax, Commissioner of Income-Tax v. Bharti Cellular Ltd., Commissioner of Income-Tax, International Taxation v. Relx Inc., Commissioner of Income-Tax v. India Capital Markets (P) Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M.S. NETHRAPAL
• Assessee Lawyers: PRASHANT MEHARCHANDANI; JAINENDER SINGH KATARIA; ADVOCATES
• Keywords: Question of law; TDS; Double taxation relief; Permanent establishment
• Section: 143(3); 12A; 234B; 40(a)(ia)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : D : NEW DELHI BEFORE MS. MADHUMITA ROY, JUDICIAL MEMBER AND SHRI SANJAY AWASTHI, ACCOUNTANT MEMBER ITA No.973/Del/2025 Assessment Year : 2022-23 Springer Nature Customer Service Centre GmbH, Europaplatz 3, 69115 Heidelberg, Germany. PAN: AASCS1092B Vs. ACIT, Circle-3(1)(2), International Taxation, New Delhi. (Appellant) (Respondent) Assessee by : Shri Prashant Meharchandani & Shri Jainender Singh Kataria, Advocates Revenue by : Shri M.S. Nethrapal, CIT-DR Date of Hearing : 24.02.2026 Date of Pronouncement : 24.02.2026 ORDER PER MADHUMITA ROY, JM: The instant appeal filed by the assessee is directed against the assessment order dated 13.12.2024 passed by the Ld. Asstt. Commissioner of Income-tax, Circle International Taxation-3(1)(2), Delhi [hereinafter referred to as the Ld. AO] under Section 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for Assessment Year 2022-23. Printed from counselvise.com ITA No.973/Del/2025 2 2. The Appellant, a German company, is a part of Springer Nature Group (‘SNG') and acts as a commissionaire/sales representative for affiliated SNG publisher entities, including Springer Nature India Pvt. Ltd. (SNIPL). Under the agreements entered into with the affiliates entities, it is appointed on a non- exclusive basis to promote and sell online journals and publications globally (excluding America). The Appellant enters into subscription agreements with customers, collects subscription fees, and remits the entire amount to the SNG publishers after deducting its commission. For the subject year, the Appellant had filed its return of income on 05.11.2022, declaring income of INR 38,56,200/- and claiming an income-tax refund of INR 7,01,43,460/- on account of taxes deducted at source. The Appellant has reported subscription revenue from third-party end customers of INR 69,49,14,662/- and commission income from SNIPL of INR 1.62,42.639/- as 'Income not chargeable to tax as per DTAA. The present appeals concern these two items — subscription fee and the commission income. 3. Ground No.1 is general in nature 4. Grounds No.2 to 4 relates to treatment of commission as FTS under the Act and DTAA. 5. The question before us as to whether commission income qualifies as FTS. As it is argued by the Ld. Counsel appearing for the assessee which has not been Printed from counselvise.com ITA No.973/Del/2025 3 controverted by the Ld. DR with all his fairness that the issue is squarely covered in assessee’s own case for previous years in favour of assessee by and under the order dated 12.07.2023 passed by the Hon’ble Delhi High Court holding that the commission income is not FTS under the Act or DTAA copy whereof has duly been annexed to the paper book filed before us. While granting relief to the assessee, the Hon’ble Court has been pleased to observed as under:- “14. Having heard the learned counsel for the parties and perused the record, as is obvious upon perusal of the prefatory facts noted above, the appellant/revenue was aggrieved by the two (2) additions deleted by the Tribunal via the impugned order. 15. Insofar as the first deleted addition is concerned, the CIT(A) sustained one of the two components, which consisted of commission received by the respondent/assessee, by treating the same as FTS, instead of royalty. To that extent, the CIT(A) veered away from the Assessment Order. 15.1 The Tribunal reversed the conclusion arrived at by the CIT(A) in this regard. The amount involved was Rs. 22,89,835. Undoubtedly, for this addition to be sustained as FTS, the services rendered by the respondent/assessee would have to fall under one or more of the following categories, i.e., managerial, technical or consultancy services. This is evident upon a plain reading of the provisions of Section 9(1) (vii)(b) read with explanation 2 of the Act and Article 12(4) of the DTAA. 15.2 Section 9 creates a deeming fiction as regards income accruing or arising in India, which, inter alia, involves FTS paid by a person who is a resident. Explanation 2 appended to the said provision defines FTS to mean any consideration, (including any lumpsum consideration), for rendering any managerial, technical or consultancy services, but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head \"salaries\". 15.3 Article 12(4) defines FTS as follows: \" The term \"fees for technical services\" as used in this Article means payment of any amount in consideration for the services of managerial, technical or consultancy nature, including the provision of services by Printed from counselvise.com ITA No.973/Del/2025 4 technical or other personnel, but does not include payment for services mentioned in Article 15 of this Agreement.\" 15.4 Therefore, for the consideration received by the respondent/assessee against services rendered as per the Commissionaire Agreement to be construed as FTS, the services would have to fall under one or more categories mentioned above, i.e., managerial, technical or consultancy services. 16. Admittedly, even according to the appellant/revenue, the respondent/assessee, under the Commissionaire Agreement, was required to promote, sell and distribute books and journals published by SIPL in print and electronic form. Besides this, something which is not disputed by the appellant/revenue, the following services were rendered by the respondent/assessee: (i) Global sales and marketing services (ii) Customer services (iii) Order-handling (iv) Address maintenance (v) Stock keeping and inventory management (vi) Invoicing (vii) Delivery (physical as well as online) (viii) Debtor management services (ix) Subscription management (x) Return copies processing 17. For rendering the aforementioned services, the respondent/assessee was paid a commission, at the rate of 9.9%, on the net revenue amount of \"any and all\" sales commissioned through the intermediary of the respondent/assessee. (See Article 4a1 of the Commissionaire Agreement). 18. Furthermore, the respondent/assessee was empowered to retain the commission when transferring the revenue to SIPL, or via any other payment of commission agreed upon between SIPL and itself. 19. Importantly, the title in the publications remained with SIPL, which the respondent/assessee could assign \"property/licenses\" to third parties, albeit on behalf of SIPL. 20. There is nothing in the Commissionaire Agreement which is suggestive of the fact that the respondent/assessee was required to discover, develop, Printed from counselvise.com ITA No.973/Del/2025 5 or define/evaluate the goals that SIPL had to reach, or even frame policies that led to these goals, or supervise or execute or change policies that were already adopted. The respondent/assessee was not performing, as it were, executive or supervisory functions. All that the respondent/assessee was obliged to do was render support to business operations. 20.1 The array of obligations as adverted to in Article 12 and 33 of the Commissionaire Agreement cannot be construed as managerial services. [(a) Subject to full and complete compliance by Commissionaire of its obligations as set forth in this Agreement, Publisher shall pay Commissionaire a commission of 9.9 percent on the net revenue amount of any and all sales commissioned through the intermediary of Commissionaire. Such commission should be regarded as the consolidated compensation for the services rendered by the Commissionaire on behalf of the Publisher as mentioned in article 3 of this Agreement and the credit risk assumed by the Commissionaire according to article 5 of this Agreement. Article 1. Appointment and Authorization of Commissionaire Agency Commissionaire is hereby appointed on a non-exclusive basis as the sales representative on a global basis with the exclusion of the Americas (hereinafter referred to as Rest of World, \"ROW\") to promote, sell and distribute the Publisher's products (amongst others but not limited to print books and journals, online books and journals, eBooks, Online Journal Archive, Online Book Archive and licenses hereinafter referred to as \"the Products\") and to fulfil the needs and requirements of the customers for Publisher's Products there.] 21. Technical services are generally connected with applied and industrial sciences or craftsmanship, involving special skills or knowledge, excluding fields such as art, or human sciences. 21.1 Likewise, consultancy services involve rendering professional advice or service in a specialised field. 22. Once again, there is no reference to any special skill or knowledge that the respondent/assessee personnel brought to bear in rendering the services encapsulated in the Commissionaire Agreement. Promotion, sale, or [The Publisher retains the right to make sales directly to its customers. Commissionaire will act as distributor of Publisher and will therefore act in its own name but for the risk and account of the Publisher, Prices for the Products will be determined by the Publisher. Printed from counselvise.com ITA No.973/Del/2025 6 Article 3. Scope of the Commissionaire's basic responsibilities Commissionaire shall perform (either itself or by means of delegation to related or non-related party) the following services as may be required by Publisher, in accordance with the highest standards of the industry and in accordance with the Publisher's Terms and Conditions: (a) Customer services (b) Order handling (c) Address maintenance (d) Stock-keeping and inventory management (e) Invoicing (f)Delivery (Physical as well as online access) (g) Debtor management services (e.g.. collect outstanding invoices) (h) Subscriptions management (i) Return copies processing Commissionaire shall arrange for global sales and marketing services. The allocation of the global sales & marketing costs incurred by the commissionaire shall be paid out of the gross commission mentioned in Article 4a.] distribution of SIPL's publications, or rendering support services of the nature referred to in Article 3 of the Commissionaire Agreement, although involving human intervention, do not, in our view, fall in the category of technical and/or consultancy services. There were no special skills or knowledge that the respondent/assessee's personnel were required to possess to render the services that were contemplated under the Commissionaire Agreement. The respondent/assessee also did not render any professional advice, or service concerning a specialised field. As indicated above, for a service to be categorised as a technical service, it had to be concerned with applied science, i.e., using scientific knowledge for practical applications, or industrial science concerning, relating to or derived from industry. 23. Therefore, the contention of Mr Bhatia that on account of there being human intervention, the services rendered by the respondent/assessee should be considered as technical services, is a submission, which according to us, is completely misconceived. 24. Given this position, we are not inclined to interfere with the decision arrived at by the Tribunal concerning the deletion of the addition made amounting to Rs.22,89,835, on account of commission received by the respondent/assessee. The CIT(A)'s conclusion that the said amount received by the respondent/assessee had attributes of FTS was, in our view, erroneous.” Printed from counselvise.com ITA No.973/Del/2025 7 6. Having regard to the identical issue involved in the matter, we do not find any reason to deviate from the ratio laid down by the Hon’ble High Court confirming the order passed by the ITAT in assessee’s own case and respectfully relying the same we, thus, allow this ground of appeal raised by the assessee. 7. Ground Nos. 5 to 6 relate to treatment of subscription fee as FTS under the Act and DTAA. As above, the instant issue is also covered in assessee’s own case by the Hon’ble Delhi High Court by and under a common order dated 16.04.2025 for assessment year 2020-21 and 2021-22 copy whereof has duly been annexed to the paper book filed before us. While granting relief to the assessee, the Hon’ble Court has been pleased to observed as under:- ”16. The first and foremost question to be considered is whether the subscription fee could be construed as FTS for the purpose of Section 9(1)(vii) of the Act. Explanation 2 to Section 9(1)(vii) of the Act explains the meaning of expression “FTS” as under: “Explanation 2.—For the purposes of this clause, \"fees for technical services\" means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head \"Salaries\"; 17. In Skycell Communications Ltd. v. Deputy Commissioner of Income-Tax: (2001) 251 ITR 53, the Hon’ble Madras High Court had examined the scope of the expression “fees for technical services” with reference to Explanation 2 to Section 9(1)(vii) of the Act and had observed as under: “7. This definition shows that consideration paid for the rendering of any managerial, technical or consultancy service, as Printed from counselvise.com ITA No.973/Del/2025 8 also the consideration paid for the provision of services of technical or other personnel, would be regarded as fees paid for “technical service”. The definition excludes from its ambit consideration paid for construction, assembly, or mining or like project undertaken by the recipient, as also consideration which would constitute income of the recipient chargeable under the head “Salaries”. 8. Thus while stating that “technical service” would include managerial and consultancy service, the Legislature has not set out with precision as to what would constitute “technical” service to render it “technical service”. The meaning of the word “technical” as given in the New Oxford Dictionary is adjective 1. of or relating to a particular subject, art or craft or its techniques: technical terms (especially of a book or article) requiring special knowledge to be understood: a technical report. 2. of involving, or concerned with applied and industrial sciences: an important technical achievement. 3. resulting from mechanical failure: a technical fault. 4. according to a strict application or interpretation of the law or the rules: the arrest was a technical violation of the treaty. 9. Having regard to the fact that the term is required to be understood in the context in which it is used, “fee for technical services” could only be meant to cover such things technical as are capable of being provided by way of service for a fee. The popular meaning associated with “technical” is “involving or concerning applied and industrial science”. 10. In the modern day world, almost every facet of one's life is linked to science and technology inasmuch as numerous things used or relied upon in every day life is the result of scientific and technological development. Every instrument or gadget that is used to make life easier is the result of scientific invention or development and involves the use of technology. On that score, every provider of every instrument or facility used by a person cannot be regarded as providing technical service. 11. When a person hires a taxi to move from one place to another, he uses a product of science and technology, viz., an automobile. It cannot on that ground be said that the taxi driver who controls the vehicle, and monitors its movement is rendering a technical service to the person who uses the automobile. Similarly, when a person travels by train or in an aeroplane, it cannot be said that the railways or airlines is rendering a technical service to the passenger and, therefore, the passenger is under an obligation to deduct tax at source on the payments made to the railway or the Printed from counselvise.com ITA No.973/Del/2025 9 airline for having used it for travelling from one destination to another. When a person travels by bus, it cannot be said that the undertaking which owns the bus service is rendering technical service to the passenger and, therefore, the passenger must deduct tax at source on the payment made to the bus service provider, for having used the bus. The electricity supplied to a consumer cannot, on the ground that generators are used to generate electricity, transmission lines to carry the power, transformers to regulate the flow of current, meters to measure the consumption, be regarded as amounting to provision of technical services to the consumer resulting in the consumer having to deduct tax at source on the payment made for the power consumed and remit the same to the Revenue. 12. Satellite television has become ubiquitous, and is spreading its area and coverage, and covers millions of homes. When a person receives such transmission of television signals through the cable provided by the cable operator, it cannot be said that the home owner who has such a cable connection is receiving a technical service for which he is required to deduct tax at source on the payments made to the cable operator. 13. Installation and operation of sophisticated equipments with a view to earn income by allowing customers to avail of the benefit of the user of such equipment does not result in the provision of technical service to the customer for a fee. 14. When a person decides to subscribe to a cellular telephone service in order to have the facility of being able to communicate with others, he does not contract to receive a technical service. What he does agree to is to pay for the use of the airtime for which he pays a charge. The fact that the telephone service provider has installed sophisticated technical equipment in the exchange to ensure connectivity to its subscriber, does not on that score, make it provision of a technical service to the subscriber. The subscriber is not concerned with the complexity of the equipment installed in the exchange, or the location of the base station. All that he wants is the facility of using the telephone when he wishes to, and being able to get connected to the person at the number to which he desires to be connected. What applies to cellular mobile telephone is also applicable in fixed telephone service. Neither service can be regarded as “technical service” for the purpose of section 194J of the Act. 15. The use of the internet and the world wide web is increasing by leaps and bounds, and there are hundreds of thousands, if not Printed from counselvise.com ITA No.973/Del/2025 10 millions, of subscribers to that facility. The internet is very much a product of technology, and without the sophisticated equipment installed by the internet service providers and the use of the telephone fixed or mobile through which the connection is established, the service cannot be provided. However, on that score, every subscriber of the internet service provider cannot be regarded as having entered into a contract for availing Of technical services from the provider of the internet service, and such subscriber regarded as being obliged to deduct tax at source on the payment made to the internet service provider. 16. At the time the Income-tax Act was enacted in the year 1961, as also at the time when Explanation 2 to section 9(1)(vii) was introduced by the Finance (No. 2) Act, with effect from April 1, 1977, the products of technology had not been in such wide use as they are today. Any construction of the provisions of the Act must be in the background of the realities of day-to-day life in which the products of technology play an important role in making life smoother and more convenient. Section 194J, as also Explanation 2 in section 9(1)(vii) of the Act were not intended to cover the charges paid by the average house-holder or consumer for utilising the products of modem technology, such as, use of the telephone fixed or mobile, the cable T.V., the internet, the automobile, the railway, the aeroplane, consumption of electrical energy, etc. Such facilities which when used by individuals are not capable of being regarded as technical service cannot become so when used by firms and companies. The facility remains the same whoever the subscriber may be—individual, firm or company. “Technical service” referred in section 9(1)(vii) contemplates rendering of a “service” to the payer of the fee. Mere collection of a “fee” for use of a standard facility provided to all those willing to pay for it does not amount to the fee having been received for technical services.” 18. In Commissioner of Income-Tax v. Bharti Cellular Ltd.: (2009) 319 ITR 139, this court had concurred with the view of the Madras High Court in Skycell Communications Ltd. v. Deputy Commissioner of Income-Tax (supra) and held as under: “14. We have already pointed out that the expression “fees for technical services” as appearing in section 194J of the said Act has the same meaning as given to the expression in Explanation 2 to section 9(1)(vii) of the said Act. In the said Explanation the expression “fees for technical services” means any consideration for rendering of any “managerial, technical or consultancy services”. The word “technical” is preceded by the word Printed from counselvise.com ITA No.973/Del/2025 11 “managerial” and succeeded by the word “consultancy”. Since the expression “technical services” is in doubt and is unclear, the rule of noscitur a sociis is clearly applicable. The said rule is explained in Maxwell on the Interpretation of Statutes (Twelfth Edition) in the following words (page 289): “Where two or more words which are susceptible of analogous meaning are coupled together, noscuntur a sociis, they are understood to be used in their cognate sense. They take, as it were, their colour from each other, the meaning of the more general being restricted to a sense analogous to that of the less general.” 15. This would mean that the word “technical” would take colour from the words “managerial” and “consultancy”, between which it is sandwiched. The word “managerial” has been defined in the Shorter Oxford English Dictionary, Fifth Edition as : “of pertaining to, or characteristic of a manager, esp. a professional manager of or within an organization, business, establishment, etc.” 16. The word “manager” has been defined, inter alia, as : “a person whose office it is to manage an organization, business establishment, or public institution, or part of one ; a person with the primarily executive or supervisory function within an organization, etc., a person controlling the activities of a person or team in sports, entertainment, etc.” 17. It is, therefore, clear that a managerial service would be one which pertains to or has the characteristic of a manager. It is obvious that the expression “manager” and consequently “managerial service” has a definite human element attached to it. To put it bluntly, a machine cannot be a manager. 18. Similarly, the word “consultancy” has been defined in the said Dictionary as the work or position of a consultant ; a department of consultants. “Consultant” itself has been defined, inter alia, “as a person who gives professional advice or services in a specialized field”. It is obvious that the word “consultant” is a derivative of the word “consult” which entails deliberations, consideration, conferring with someone, conferring about or upon a matter. Consult has also been defined in the said Dictionary as “ ask advice for, seek counsel or a professional opinion from ; refer to (a source of information) ; seek permission or approval from for Printed from counselvise.com ITA No.973/Del/2025 12 a proposed action”. It is obvious that the service of consultancy also necessarily entails human intervention. The consultant, who provides the consultancy service, has to be a human being. A machine cannot be regarded as a consultant. 19. From the above discussion, it is apparent that both the words “managerial” and “consultancy” involve a human element. And, both, managerial service and consultancy service, are provided by humans. Consequently, applying the rule of noscitur a sociis, the word “technical” as appearing in Explanation 2 to section 9(1)(vii) would also have to be construed as involving a human element. But, the facility provided by MTNL/ other companies for interconnection/port access is one which is provided automatically by machines. 20. It is independently provided by the use of technology and that too, sophisticated technology, but that does not mean that MTNL/other companies which provide such facilities are rendering any technical services as contemplated in Explanation 2 to section 9(1)(vii) of the said Act. This is so because the expression “technical services” takes colour from the expressions “managerial services” and “consultancy services” which necessarily involve a human element or, what is now a days fashionably called, human interface. In the facts of the present appeals, the services rendered qua interconnection/port access do not involve any human interface and, therefore, the same cannot be regarded as “technical services” as contemplated under section 194J of the said Act. *** *** *** 26. Before concluding we would also like to point out that the interconnect/ port access facility is only a facility to use the gateway and the network of MTNL/other companies. MTNL or other companies do not provide any assistance or aid or help to the respondents/assessees in managing, operating, setting up their infrastructure and networks. No doubt, the facility of interconnection and port access provided by MTNL/other companies is “technical” in the sense that it involves sophisticated technology. The facility may even be construed as a “service” in the broader sense such as a “communication service”. But, when we are required to interpret the expression “technical service”, the individual meaning of the words “technical” and “service” have to be shed. And, only the meaning of the whole expression “technical services” has to be seen. Moreover, the expression “technical service” is not to be construed in the abstract and general sense but in the narrower sense as circumscribed by the expressions Printed from counselvise.com ITA No.973/Del/2025 13 “managerial service” and “consultancy service” as appearing in Explanation 2 to section 9(1)(vii) of the said Act. Considered in this light, the expression “technical service” would have reference to only technical service rendered by a human. It would not include any service provided by machines or robots.” 19. The aforesaid decision was carried in appeal before the Supreme Court. The Supreme Court upheld the view of the High Court that the expression “Technical Services” was required to be read in a narrow sense by applying the rule of noscitur a sociis. However, the court remanded the matter to the AO (TDS) as there was no expert evidence on record. We consider it relevant to refer to the following observations of the Supreme Court: “The question basically involved in the lead case is: whether TDS was deductible by M/s. Bharti Cellular Limited when it paid interconnect charges/access/port charges to BSNL? For that purpose, we are required to examine the meaning of the words “fees for technical services” under Section 194J read with clause (b) of the Explanation to Section 194J of the Income Tax Act, 1961, [“the Act”, for short] which, inter alia, states that “fees for technical services” shall have the same meaning as contained in Explanation 2 to clause (vii) of Section 9(1) of the Act. Right from 1979, various judgments of the High Courts and Tribunals have taken the view that the words “technical services” have got to be read in the narrower sense by applying the rule of noscitur a sociis, particularly, because the words “technical services” in section 9(1)(vii) read with Explanation 2 comes in between the words “managerial and consultancy services”. 20. In a later decision in Commissioner of Income Tax v. Kotak Securities: (2016) 383 ITR 1, the Supreme Court considered the question, whether the transaction charges paid by a member of the Bombay Stock Exchange to transact business of sale and purchase of securities on the platform operated by Bombay Stock Exchange could be considered as FTS as held by the Bombay High Court. The Supreme court referred to Explanation 2 to Section 9(1)(vii) of the Act as well as the aforementioned observations made by the Supreme Court in Commissioner of Income-Tax v. Bharti Cellular Ltd.: (2011) 330 ITR 239 and held as under: “6. What meaning should be ascribed to the word “technical services” appearing in Explanation 2 to clause (vii) to Section 9(1) of the Act is the moot question. In Commissioner of Income-Tax Vs. Bharti Cellular Ltd. this Court has observed as follows: Printed from counselvise.com ITA No.973/Del/2025 14 “Right from 1979, various judgments of the High Courts and Tribunals have taken the view that the words “technical services” have got to be read in the narrower sense by applying the rule of noscitur a sociis, particularly, because the words “technical services” in section 9(1)(vii) read with Explanation 2 comes in between the words “managerial and consultancy services”. 7. “Managerial and consultancy services” and, therefore, necessarily “technical services”, would obviously involve services rendered by human efforts. This has been the consistent view taken by the courts including this Court in Bharti Cellular Ltd. (supra). However, it cannot be lost sight of that modern day scientific and technological developments may tend to blur the specific human element in an otherwise fully automated process by which such services may be provided. The search for a more effective basis, therefore, must be made. 8. A reading of the very elaborate order of the assessing officer containing a lengthy discourse on the services made available by the Stock Exchange would go to show that apart from facilities of a faceless screen based transaction, a constant upgradation of the services made available and surveillance of the essential parameters connected with the trade including those of a particular/single transaction that would lead credence to its authenticity is provided for by the Stock Exchange. All such services, fully automated, are available to all members of the Stock Exchange in respect of every transaction that is entered into. There is nothing special, exclusive or customised service that is rendered by the Stock Exchange. “Technical services” like “managerial and consultancy service” would denote seeking of services to cater to the special needs of the consumer/user as may be felt necessary and the making of the same available by the service provider. It is the above feature that would distinguish/identify a service provided from a facility offered. While the former is special and exclusive to the seeker of the service, the latter, even if termed as a service, is available to all and would, therefore, stand out in distinction to the former. The service provided by the Stock Exchange for which transaction charges are paid fails to satisfy the aforesaid test of specialised, exclusive and individual requirement of the user or consumer who may approach the service provider for such assistance/service. It is only service of the above kind that, according to us, should come within the ambit of the expression “technical services” appearing in Explanation 2 toSection 9(1)(vii) of the Act. In the absence of the above Printed from counselvise.com ITA No.973/Del/2025 15 distinguishing feature, service, though rendered, would be mere in the nature of a facility offered or available which would not be covered by the aforesaid provision of the Act.” 21. A plain reading of the aforesaid observations indicate that for any income to be construed as FTS, it is necessary that fees is received for a service which is exclusive or customized and would not take into sweep standardized automated services, the access of which could be granted to all on payment of charges. 22. In Commissioner of Income-Tax, International Taxation v. Relx Inc.: [2024] 160 taxmann.com 109 (Delhi), this court considered an appeal from a decision of the learned ITAT whereby the Revenue’s contention that fees received for accessing online database pertaining to legal and law related information was not chargeable to tax as FTS. In that case, the assessee was a tax resident of United States of America and was engaged in the business of maintaining online database of information relating to law including judgments, articles, information relating to patent applications before the Patent Registry and legal authorities (Lexis Nexis). The assessee had earned income in the nature of subscription fees from subscribers in India for providing access to the database (Lexis Nexis). Additionally, the persons interested in purchasing digital versions of books, journals and articles could purchase the same on payment of a price for the said books, journals and articles. 23. In this context, the Coordinate Bench of this court observed as under: “10. It must at the outset be noted that Section 9(1)(vii) of the Act could have been resorted to, provided it were found to be more beneficial to the assessee when compared to the provisions of the DTAA. However, notwithstanding the above, it is apparent that the submissions addressed on this score are clearly unmerited. As is plainly evident from a reading of Explanation 2 of Section 9(1)(vii) of the Act and which defines FTS, it contemplates consideration which may be said to fall within the ambit of rendering of a managerial, technical or consultancy service. The mere access granted to a subscriber to the legal data base would clearly not fall within the ambit of Section 9(1)(vii) of the Act. All that the assessee does is provide access to the database. It has not been shown to be providing any further managerial, technical or consultancy service to a subscriber. We, in any case, find ourselves unable to countenance the contention that the access so granted could be construed as providing services of the nature spoken of in Section 9(1)(vii) of the Act.” Printed from counselvise.com ITA No.973/Del/2025 16 24. In Commissioner of Income Tax v. India Capital Markets (P) Ltd.:[2017] 79 taxmann.com 45 (Bom), the Bombay High Court rejected the Revenue’s contention that tax was required to be deducted from payments made to M/s Bloomberg (engaged in publishing e-magazines) for subscription of e-magazines. The court noted that Bloomberg’s magazines / information were backed by solid research carried out by employees, and were made available on the website and observed that the same would not result in Bloomberg rendering any consultative services. The Bombay High Court’s finding in this regard is set out below: “(d) We find that both the Commissioner of Income Tax (Appeals) as well as the Tribunal have reached a concurrent finding of fact that payments made to M/s Bloomberg was made for subscription to e-magazines and therefore, there is no occasion to deduct as the tax under the Act. Thus under Section 40(a)(ia) of the Act could not have been invoked. The submission on behalf of the revenue that Bloomberg’s magazines/information is backed by solid research carried out by its employees and made available on website would not by itself result in M/s Bloomberg rendering any consultative services. It is not the case of the revenue that specific queriesraised by the respondent-assessee were answered to by M/s Bloomberg as a part of the consideration of Rs.4.34 lacs. The Information is made available to all subscribers to e- magazines/journal of M/s Bloomberg. Therefore, in no way the payments made to M/s Bloomberg can be considered to be in the nature of any consultative/professional services rendered by Bloomberg to the respondents. In any view of the matter, the findings reached by both authorities cannot be said to be perverse or arbitrary. It is a possible view and consequently Question (B) as proposed does not give rise to any substantial question of law. Accordingly, not entertained.” 25. We also consider it relevant to refer to Paragraph 3 of Article 12A of the United Nations Model Double Taxation Convention – 2021 [UNMDTC- 2021] which defines the terms “fees for technical services”. The same is set out below: “3. The term “fees for technical services” as used in this Article means any payment in consideration for any service of a managerial, technical or consultancy nature, unless the payment is made: (a) to an employee of the person making the payment; (b) for teaching in an educational institution or for teaching by an educational institution; or Printed from counselvise.com ITA No.973/Del/2025 17 (c) by an individual for services for the personal use of an individual.” 26. The opening sentence of Paragraph 3 of the UNMDTC-2021 bears similarity to the definition of the expression ‘FTS’ within the meaning of Explanation 2 to Section 9(1)(vii) of the Act. 27. The following passages from the Commentary on Paragraph 3 of Article 12A of the UNMDTC-2021 are instructive: “62. Article 12A applies only to fees for technical services, and not to all payments for services. Paragraph 3 defines “fees for technical services” as payments for managerial, technical or consultancy services. Given the ordinary meanings of the terms “managerial,” “technical” and “consultancy,” the fundamental concept underlying the definition of fees for technical services is that the services must involve the application by the service provider of specialized knowledge, skill or expertise on behalf of a client or the transfer of knowledge, skill or expertise to the client, other than a transfer of information covered by the definition of \"royalties\" in paragraph 3 of Article 12. Services of a routine nature that do not involve the application of such specialized knowledge, skill or expertise are not within the scope of Article 12A. 63. The ordinary meaning of the term \"management\" involves the application of knowledge, skill or expertise in the control or admin-istration of the conduct of a commercial enterprise or organization. Thus, if the management of all or a significant part of an enterprise is contracted out to persons other than the directors, officers or employ-ees of the enterprise, payments made by the enterprise for those management services would be fees for technical services within the meaning of paragraph 3. Similarly, payments made to a consultant for advice related to the management of an enterprise (or of the business of an enterprise) would be fees for technical services. 64. The ordinary meaning of the term \"technical\" involves the application of specialized knowledge, skill or expertise with respect to a particular art, science, profession or occupation. Therefore, fees received for services provided by regulated professions such as law, accounting, architecture, medicine, engineering and dentistry would be fees for technical services within the meaning of paragraph 3. Thus, if an individual receives payments for professional services referred to in paragraph 2 of Article 14 from a resident of a Contracting State, those payments would be fees for technical services. If the payments arise in that Printed from counselvise.com ITA No.973/Del/2025 18 Contracting State because they are made by a resident of that State or borne by a permanent establishment or fixed base in that State, the payments would be subject to tax by that State in accordance with paragraph 2 irrespective of the fact that the services are not per-formed in that State through a fixed base in that State. 65. Technical services are not limited to the professional services referred to in paragraph 2 of Article 14. Servicesperformed by other professionals, such as pharmacists, and other occupations, such as scientists, academics, etc., may also constitute technical services if those services involve the provision of specialized knowledge skill and expertise. *** *** *** 86 The following examples illustrate the application of the definition of “fees for technical services” in paragraph 3. *** *** *** 90. Example 3: R Company is a resident of State R. R Company's business is the collection, organization and maintenance of various databases. R Company sells access to these databases to its clients. One of R Company's clients is Company S, a resident of State S. State R and State S have entered into a tax treaty that contains a provision identical to Article 12A of the United Nations Model Tax Convention. The payments that R Company receives from S Company for access to its databases would not be fees for technical services within the meaning of paragraph 3. Although R Company used its knowledge, skill and expertise in creating the database, the services that R Company provides to S Company-access to the database-are routine services that do not involve the application of R Company's knowledge, skill and expertise for the benefit of S Company. Accordingly, Article 12A would not apply to the payments. 91. If, however, S Company entered into a contract with R Company under which R Company created a specialized database customized for S Company's use from information supplied by S Company or collected by R Company, the payments by S Company to R Company would be “fees for technical services” under paragraph 3. In this situation, R Company would be applying its knowledge, skill and expertise for the benefit of S Company. As a result, the payments would be taxable by State S in accordance with paragraph 2. It would not matter whether R Company performed all or any part of the services of creating the database in State S.” Printed from counselvise.com ITA No.973/Del/2025 19 28. For any receipt to fall within the expression ‘fees for technical services’, it is necessary that the same be received as consideration for rendering services which are of technical nature. The expression “rendering of managerial, technical or consultancy services” must necessarily be construed in a narrow sense where such specialized services are rendered by the service provider as may be required by the service recipient. Ordinarily, the same would require human intervention. Mere access to technical database or technical literature would not constitute provision of technical services. The sale of technical texts, information or research material collated by extensive research would not constitute rendering technical services within the scope of Section 9(1)(vii) of the Act 29. In the facts of the present case, the subscription fee collected by the Assessee from various third parties is for subscription to e-magazines and content which is standardized and not specifically collected or generated for any particular entity. Thus, clearly, the subscription fee would not partake the character of a ‘fee for technical service’ within the meaning of Explanation 2 to Section 9(1)(vii) of the Act. 30. In the aforesaid view, it is not necessary to examine the provisions of DTAA. The same would be necessary only if the subscription fee was chargeable to tax under the normal provisions of the Act. 31. In view of the above, no substantial question of law arises for consideration of this court.” 8. Having regard to the identical issue involved in the matter, we do not find any reason to deviate from the ratio laid down by the Hon’ble High Court confirming the order passed by the ITAT in assessee’s own case and respectfully relying the same we, thus, allow this ground of appeal raised by the assessee. 9. Ground No.7 and 8 relate to levy of interest of INR 3,20,826 under Section 234B. In this regard, the ld. Counsel appearing for the assessee has drawn our attention to the computation sheet appearing at page 45 to 46 of the Printed from counselvise.com ITA No.973/Del/2025 20 appeal set particularly the item No.38 and 42 therein. It has been further stated by him that though interest of levy is consequential in nature, however, it is submitted that interest of INR 66,63,623/- has been levied without even specifying the statutory provision under which such interest has been levied which is unlawful and therefore, the interest liable to be deleted (reliance is placed on CIT v. Jagan & Co. [2014] 49 taxmann.com 57 (Allahabad). Since the issue have already been decided in favour of the assessee, the penalty u/s 234B has automatically lost its force as the same is consequential one and no order needs to be passed. 10. In the result, the Assessee’s appeal is allowed. Order pronounced in the open court on 24.02.2026. Sd/- Sd/- (SANJAY AWASTHI) (MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated:24th February, 2026. dk Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asstt. Registrar, ITAT, New Delhi Printed from counselvise.com "