Delhi High Court
Coursera Inc vs Income Tax Officer Tds 1(2)(1) & ... on 22 December, 2021
$~55
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 22th December, 2021
+ W.P.(C) 14714/2021 & CM APPL. 46330-31/2021
COURSERA INC
..... Petitioner
Through: Ms.Kavit Jha, Mr.Himanshu
Aggarwal & Mr.Udit Naresh,
Advs.
versus
INCOME TAX OFFICER TDS 1(2)(1) & ORS.
..... Respondents
Through: Mr.Sunil Agarwal, Sr. Standing
Counsel with Mr.Tushar Gupta,
Jr. Standing Counsel &
Mr.Samarth Chaudhari, Adv.
CORAM:
HON'BLE MR. JUSTICE MANMOHAN
HON'BLE MR. JUSTICE NAVIN CHAWLA
MANMOHAN, J. (Oral)
1. Present writ petition has been filed challenging the order dated
27.09.2021 and certificate dated 23.09.2021 issued by Respondent
No.1, under section 197(1) of the Income Tax Act, 1961 ('the Act').
Petitioner seeks directions to the Respondents to issue certificate with
'NIL' deduction of income tax in favour of the Petitioner for financial
year 2021-22.
Signature Not Verified
Digitally Signed
By:KRISHNA BHOJ
Signing Date:23.12.2021
19:28:55
2. Learned counsel for the Petitioner states that the impugned
order dated 27.09.2021 rejecting Petitioner's application for NIL
deduction directing the customers of the Petitioner to withhold tax @
10% is arbitrary and no reason has been given in the order for arriving
at such a conclusion. She states that the Petitioner acts merely as an
aggregator of educational institutions making access to various
courses easier and that upon successful completion of the course, a
certificate to this effect which bears the seal of the institution
concerned is awarded to the student.
3. She further states that the Petitioner being a tax resident of
USA, has no PE in India and so business profits arising to the
Petitioner in India are not liable to tax in India. She also states that the
gross receipts of the petitioner can neither be characterised as Royalty
nor Fees for included services ('FIS') in terms of Article 12 of India-
USA Double Tax Avoidance Agreement ('DTAA'). The Petitioner
has not transferred any copyright to its customers as there is no right
to commercially exploit the content hosted on the e-platform and/or
the services rendered are technical or consultancy in nature. She also
submits that the Petitioner has already submitted itself to the Indian
Tax jurisdiction by paying Equalisation levy @ 2% in terms of the
Finance Act, 2020 and the entire receipts of the Petitioner relates only
to the e-commerce activity.
4. Per Contra learned Counsel for the Revenue has drawn our
attention to the provisions of section 10(50) of the Act, amended with
effect from 1st April, 2021, which reads as under:
Signature Not Verified
Digitally Signed
By:KRISHNA BHOJ
Signing Date:23.12.2021
19:28:55
"Any income arising from any specified service
provided on or after the date on which the provisions
of Chapter VIII of the Finance Act, 2016 comes into
force [or arising from any e-commerce supply or
services made or provided or facilitated on or after the
1st day of April, [2020]] and chargeable to
equalisation levy under that Chapter.
[Explanation 1.--For the removal of doubts it is
hereby clarified that the income referred to in
this clause shall not include and shall be deemed
never to have been included any income which is
chargeable to tax as royalty or fees for technical
services in India under this Act read with the
agreement notified by the Central Government
under section 90 or section 90A................"
5. Mr.Agarwal submits that after amendment of section 10(50) of
the Act by Finance Act 2021 w.e.f.01-04-2021, the concept of
apportionment of receipts has been introduced. Therefore, out of the
total amount of receipts of the petitioner, the amount characterised as
royalty or fees for technical services will be chargeable to tax under
the Act read with provisions of applicable DTAA as royalty and/or fee
for technical services for the purposes of TDS under section 195 of the
Act. Balance amount, if any, will be chargeable to Equalisation Levy.
6. After hearing the counsels for parties, this court finds the
Impugned Order in the initial part records as under:-
"That the receipts from Indian customers are not
chargeable to tax as royalty/FTS under the provisions
of the Act read with India US tax treaty. Since, the
assessee has been suo moto paying equalization levy
@2% on receipts from Indian customer and has filed
Signature Not Verified
Digitally Signed
By:KRISHNA BHOJ
Signing Date:23.12.2021
19:28:55
copies of Equalisation Levy challans as evidence, such
receipts may be subjected to TDS under section 195 of
the Act @4% keeping in the interest of Revenue. This
recommendation is made owing to the limited frame
work of nature of proceedings under section 197"
7. However, the petitioner has been directed to deduct TDS @
10% on the entire amount. There is no reasoning as to how the rate
finally granted has been arrived at.
8. The Impugned Order does not take into account the impact, if
any, of the amendment carried out to section 10(50) of the Act by
Finance Act 2021 w.e.f. 01-04-2021. The said amendment states that
the amounts taxable as royalty/fees for technical services under the
Act read with section 90/90A of the relevant double taxation
avoidance agreement [DTAA] will not be exigible for being
considered for the charge of Equalisation Levy.
9. The Petitioner in its application for certificate under section 197
dated 23.09.2021 describes itself as an e-platform operator. In the later
part of the same application the petitioner claims itself to be a
university for the purposes of article 12(5)(c) of the DTAA between
India and United States of America. The AO, in the Impugned Order
holds the Petitioner is not eligible for the benefit of article 12(5) (c) of
the DTAA. However, the Impugned Order does not contain any
reasoning or discussion on the applicability or otherwise of various
sub-articles of the DTAA to the fact situation of the case.
Signature Not Verified
Digitally Signed
By:KRISHNA BHOJ
Signing Date:23.12.2021
19:28:55
10. Consequently, the impugned order dated 27.09.2021 is hereby
set aside with a direction to the Respondent No. 1 to pass a de novo
reasoned order after taking into account the amendments made to the
provisions of section 10(50) of the Act w.e.f. 01.04.2021 i.e. to
exclude the receipts of the Petitioner which is subject to withholding
tax at source to the extent such receipts are exigible to Equalisation
Levy within a period of 4 weeks after granting opportunity of being
heard to the petitioner. It will be incumbent upon the petitioner to
furnish to the Assessing Officer the information required by the
Assessing Officer expeditiously.
11. It is clarified that this court has not expressed any opinion on
the merits of the case. Needless to say all contentions of either side are
left open.
12. Instant petition is disposed of in the above terms.
13. Liberty is granted to parties to approach this Court in case the
need arises.
MANMOHAN, J
NAVIN CHAWLA, J
DECEMBER 22, 2021/rv
Signature Not Verified
Digitally Signed
By:KRISHNA BHOJ
Signing Date:23.12.2021
19:28:55
