Income Tax Appellate Tribunal - Mumbai
American Chemical Society,Usa vs Dcit (International Tax), Circle ... on 13 November, 2025
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH "I" MUMBAI
BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER)
AND
SHRI RAHUL CHAUDHARY (JUDICIAL MEMBER)
ITA No. 1603/MUM/2025
Assessment Year: 2022-23
American Chemical Society, DCIT (International Tax), Circle
C/o Deloitte Haskins and Sells 1(1)(1),
LLP, 7th floor, Building 10, Tower Vs. Room No. 534, 5th floor, Kautilya
B, DFL Cyber City Complex, DLF Bhavan, C-41 to C-43, G Block,
City Phase-II, Bandra Kurla Complex, Bandra
Gurgaon-122002. (East), Mumbai-400051.
PAN NO. AALCA4959L
Appellant Respondent
Assessee by : Mr. Vishal Karla
Revenue by : Mr. Satya Pal Kumar, CIT-DR
Date of He aring : 12/09/2025
Date of pronouncement : 13/11/2025
ORDER
PER OM PRAKASH KANT, AM
This appeal by the assessee is directed against final assessment order dated 27.01.2025, passed by the Ld. Assistant/ Deputy Commissioner of Income-tax (International Taxation) - 1(1)(1), Mumbai (in short the Assessing Officer), pursuant to the direction of Ld. Dispute Resolution Panel (in short ld. DRP) for assessment year 2022-23, raising following grounds:
American Chemical Society 2 ITA No. 1603/MUM/2025
1. That on the facts and circumstances of the case and in law, the facts Ld. AO has erred in assessing the total income of the Appellant under Section 143(3) read with Section 144C(13) of the Act at INR 1,47,44,58,663 as against the returned income of Nil.
2. That on the facts and circumstances of the case and in law, the Ld. AO/ Dispute Resolution Panel ("DRP") have erred in holding that the receipts from Indian customers are chargeable to tax as royalty in terms of Article 12(3) of India US Double Tax Avoidance India-US Agreement ("DTAA") and under Section 9(1)(vi) of the Act.
2.1 That on the facts and in the circumstances of the case and in law, the Ld. AO/ DRP have erred in holding that the subscription charges received under Chemical Abstract Service (CAS) division (PUBS) division would be chargeable to tax in India and Publications (PUBS) US DTAA being received for use of information under India--US concerning industrial, commercial or scientific experience and / or for use of industrial, commercial or scientific equipment.
2.2 That on the facts and circumstances of the case and in law, the Ld. AO/ DRP have erred in not following the principle of consistency, while holding that subscription charges received by the appellant are chargeable to tax under the India-US India US DTAA as being received for use of industrial, commercial or scientific equipment, not appreciating that the same has never been held in the past by the Ld. AO/ DRP.
2.3 That on the facts and circumstances of the case and in law, the Ld. AO/ DRP have erred in holding that the subscription charges received under CAS and PUBS divisions would be chargeable to tax in India under India-US India US DTAA being received for use of ACS databases / software.
2.4 That on the facts and circumstances of the case and in law, the following the decision passed by the Ld. AO/DRP have erred in not following Income tax Appellate Tribunal ("ITAT") Hon'ble Mumbai Bench of the Income-tax in Appellant's own case for immediately preceding assessment years i.e. AY 2014-15 2014 to 2021-22, wherein on similar facts and circumstances, the Hon'ble ITAT held held that the revenue from CAS and PUBS division cannot be taxed as royalty under Section 9(1)(vi) of the Act as well as Article 12(3) of India-US India DTAA.
3. That on the facts and circumstances of the case and in law, the Ld. AO has erred in levying interest of INR 4,32,67,210 under Section 234B of the Act.
American Chemical Society 3 ITA No. 1603/MUM/2025
4. That on the facts and circumstances of the case and in law, the Ld. AO has grossly erred in computing the aggregate income tax liability (including interest) of the Appellant at INR 19,20,49,126.
5. Thatt on the facts and circumstances of the case and in law, the Ld. AO has erred in computing the correct amount of interest on refund under Section 244A of the Act.
6. That on the facts and circumstances of the case and in law, the initiating penalty proceedings under Section Ld. AO has erred in initiating 270A of the Act.
2. We have heard rival submissions of the parties and perused the relevant materials on record record.. In the grounds raised, the assessee is aggrieved with the finding of the ld Assessing Officer in holding that the subscription charges received under chemical abstract service division and publication division was taxable as 'royalty' under domestic law as well as under India US DTAA, DTAA being received for use of information concerning concern industrial, commercial or scientific experience and/or for use of industrial, commercial or scientific equipment. Before us, the Ld. counsel for the assessee submitted that identical issue has been decided by the Co-ordinate Co Bench of the Tribunal in ITA No. 6811/Mum/2017 for assessment asses year 2014-15 15 and ITA No. 1160/Mum/2024 for assessment year 14 in favour of the assessee and therefore, in view of principle 2013-14 of consistency without any change of facts and circumstances, the Ld. Assessing Officer/DRP is not justified in upholding addition for treating the subscription charges under chemical abstract division and publication division as royalty. We find that the Tribunal in assessment year 2014 2014-15 has specifically noted that consideration American Chemical Society 4 ITA No. 1603/MUM/2025 copyrighted article' is different from 'copyright' and received from 'copyright therefore, same does not quality as 'royalty'.. The relevant finding of the Tribunal (supra) is reproduced as under:
"17. We have heard the rival submissions and perused the relevant material on record including the order of the lower authorities on the issue in dispute. We find that issue with respect to the PUBS division coincides with the issues on the CAS fee. The journal provided by the PUBS division d do not provide any information arising from assessee's previous experience. The assessee's experience lies in the creation of/maintaining such information online. By granting access to the journals, the assessee neither shares techniques or methodology employed in its experiences, techniques evolving databases with the users, nor imparts any information relating to them. As is clearly evident from the sample agreements, all that the customers get is the right to search, view and display the articles (whether online online or by taking a print) and reproducing or exploiting the same in any manner other than for personal use is strictly prohibited. Further, the customers do not get any rights to the journal or articles therein. They can only view the article nal that they have subscribed to and cannot in the journal amend or replicate or reproduce the journal. Thus, the customers are only able to access journal/articles for personal use of the information. No 'use or right to use' in property of any kind any copyright or any other intellectual property is provided by the assessee to its customers. Furthermore, the information resides on servers outside India, to which the customers have no right or access, nor do they possess control or dominion over the servers in any way. Therefore, the question of such payments qualifying as consideration for use or right to use any equipment, whether industrial, commercial or scientific, does not arise.
18. To put a comparison, if someone purchases a book, then the consideration paid is not for the use of the copyright in the book/ article. The purchaser of a book does not acquire re sale or to make the right to make multiple copies for re-sale derivative works of the book, i.e., the purchaser of a book does not obtain the copyright in the book. Similarly, the American Chemical Society 5 ITA No. 1603/MUM/2025 purchaser of the assessee's journals, articles or database access does not have the right to make copies for re re-sale and does not have the right to make derivative works. In short, the purchaser has not acquired the copyright of the article or of the d atabase. What the buyer gets is a database.
copyrighted product, and accordingly the consideration paid is not royalty, but for purchase of a product. In the instant case too, what is acquired by the customer is a copyrighted article, copyrights of which continue to lie with assessee for all purposes. lt is a well settled law that copyrighted article is different from a copyright, and that consideration for the former, i.e. a copyrighted article does not qualify as royalties.
19. Thus, the principles noted by us in thethe earlier part of this order in the context of the income earned by way of CAS fee are squarely applicable to the subscription revenue received from customers of PUBS division for sale of journal also, and accordingly PUBS fee also does not qualify as yalty' in terms of section 9(1)(vi) of the Act as well as 'Royalty' Article 12(3) of the India-USA India DTAA."
2.1 2013 14, the Tribunal followed Further, in assessment year 2013-14, the finding of the Co-ordinate Co ordinate Bench in assessment year 2014-15.
2014The relevant finding in assessment assessme year 2013-14 14 is reproduced as under:
10. The aforesaid order so passed by the Coordinate "10.
Bench has since been consistently followed by the Coordinate Benches while adjudicating the matter for subsequent assessment years right up to A.Y 2021-22.
2021 As we have noted in the beginning, the AO has al so stated in also the assessment order that assessee's business model has 2014-15 to A.Y. remained the same in comparison to A.Y. 2014- 21 and stream of revenue was also the same and no 2020-21 other income has been earned by the assessee company admittedly and undisputedly, there are no from India. Thus, admittedly changes in the facts and circumstances of the case in the impugned assessment year except that the matter was reopened u/s 147 of the Act. Though the Revenue has challenged the orders so passed by the Coordinate Benches American Chemical Society 6 ITA No. 1603/MUM/2025 before the Hon'ble Bombay High Court and the matter is currently pending adjudication, however, there is no stay which has either been sought or granted against the orders so passed by the Coordinate Benches. Given that there are no changes in the facts a nd circumstances of the case, we and see no reason to deviate from the view so taken by the Coordinate Bench which has consistently been followed in subsequent years. In light of the same, we uphold the plea so taken by the ld AR on behalf of the assessee and hold that subscription revenues for CAS as well as PUBS divisions cannot be brought to tax as royalty in terms of India USA DTAA in section 9(1)(vi) as well as Article 12(3) of India-USA the hands of the assessee and the addition so made is hereby directed to be del deleted.
11. In light of the aforesaid, where we have deleted the addition, other grounds raised by the assessee including the ground challenging the jurisdiction of the AO have become academic in nature and we donot deem it necessary to adjudicate the same and a the same are left open."
2.2 As facts and circumstances in the year under consideration being identical, without there being any material change change, following the principle of consistency and respectfully following the Co-
Co ordinate Bench of the Tribunal, we hold that subscription charges received under chemical abstract service division and publication division are not in the nature of royalty under the provisions of the Income-tax tax Act or under the provisions of the India US DTAA. Accordingly, the issue in dispute dispute raised in the grounds of appeal of the assessee is allowed.
American Chemical Society 7 ITA No. 1603/MUM/2025
3. In the result, the appeal of the assessee is allowed.
Order pronounced ounced in the open Court on 13/11/2025.
/11/2025.
Sd/- Sd/-
Sd/
(RAHUL CHAUDHARY
CHAUDHARY) OM PRAKASH KANT)
(OM KANT
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai;
Dated: 13/11/2025
Rahul Sharma, Sr. P.S.
Copy of the Order forwarded to :
1. The Appellant
2. The Respondent.
3. CIT
4. DR, ITAT, Mumbai
5. Guard file.
BY ORDER,
//True Copy//
(Assistant Registrar)
ITAT, Mumbai