HC Rules that Standardised Subscription Fee Isn’t FTS

Case Details: Commissioner of Income-tax, International Taxation vs. Springer Nature Customer Service Centre GMBH - [2025] 174 taxmann.com 77 (Delhi)

Judiciary and Counsel Details

• Vibhu Bakhru & Tejas Karia, JJ.
• Ruchir Bhatia, SSC for the Appellant.
• Himanshu S. Sinha, Prashant Meharchandani, Vibhu Jain, Jainender Singh Kataria & Ms Kanika Jain, Advs. for the Respondent.

Facts of the Case

The assessee, a company incorporated under German laws, was a part of the Springer Nature Group, a publisher of books, journals, and content relating to science and technology. It entered into a Commissionaire Agreement with Springer Nature India Pvt. Ltd. (SNIPL) by virtue of which the assessee was appointed as a non-exclusive sales representative to promote, sell and distribute printed products (books and journals) and e-products (online books, journals and their archives).

The assessee also collected subscription fees from various customers for subscribing to the journals and books. During the assessment proceedings, the Assessing Officer (AO) treated the subscription fees as fees for technical services (FTS) and made additions to the assessee’s income. Aggrieved by the order, the assessee preferred an appeal to the Delhi Tribunal.

High Court Held

The Tribunal held that 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 a technical nature. The expression “rendering of managerial, technical or consultancy services” must necessarily be construed in a narrow sense where such specialised 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.

In the instant case, the subscription fee collected by the assessee from various third parties is for subscription to e-magazines and content, which is standardised 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’.

List of Cases Reviewed

• Springer Nature Customer Service Center GmbH v. ACIT [2024] 164 taxmann.com 354 (Delhi – Trib.) affirmed

List of Cases Referred to

• CIT v. Springer Nature Customer Services Centre GMBH [2023] 152 taxmann.com 277/294 Taxman 167/458 ITR 728 (Delhi) (para 6)
• Engineering Analysis Centre of Excellence (P.) Ltd. v. CIT [2021] 125 taxmann.com 42/281 Taxman 19/432 ITR 471 (SC) (para 14)
• Skycell Communications Ltd. v. Dy. CIT [2001] 119 Taxman 496/251 ITR 53 (Madras) (para 17)
• CIT v. Bharti Cellular Ltd. [2008] 175 Taxman 573/319 ITR 139 (Delhi) (para 18)
• CIT v. Kotak Securities Ltd. [2016] 67 taxmann.com 356/239 Taxman 139/383 ITR 1 (SC) (para 20)
• CIT, Delhi v. Bharti Cellular Ltd [2010] 193 Taxman 97/[2011] 330 ITR 239 (SC) (para 20)
• CIT v. RELX Inc [2024] 160 taxmann.com 109 (Delhi) (para 22)
• CIT v. India Capital Markets (P.) Ltd. [2017] 79 taxmann.com 45/387 ITR 510 (Bombay) (para 24).