Supreme Court Refuses To Interfere With Delhi HC Ruling On Deletion Of FTS/FIS Additions On Coursera

The Supreme Court has recently refused to interfere with the Delhi High Court ruling holding that receipts earned by Coursera Inc. from providing access to its online learning platform are not taxable as Fees for Technical Services (FTS) or Fees for Included Services (FIS) under the Income Tax Act and the India–USA DTAA.

A Bench of Justice Pamidighantam Sri Narasimha and Justice Alok Aradhe said it was not inclined to interfere with the impugned judgment of the Delhi High Court and dismissed the Special Leave Petition filed by the Revenue.

The dispute arose from the Delhi High Court's decision in Coursera Inc's matter where the Revenue had challenged an order of the ITAT deleting additions made by the Assessing Officer, who had treated the assessee's receipts as FTS/FIS.

Coursera Inc., a US-based online education platform that provides access to courses and degree programmes offered by universities and institutions worldwide, operates as an intermediary hosting such content for users.

Before the High Court, the Revenue contended that services such as customised features, user-related services and elements involving human intervention satisfied the “make available” condition under Article 12 of the Indo-US DTAA.

The learning platform, on the other hand, argued that it merely acted as an intermediary platform and did not transfer any technical knowledge or skill to users.

The High Court upheld the ITAT's findings that the assessee functioned as an aggregator and did not render technical services. It emphasised that the essential requirement of “make available” was not satisfied and that the Revenue had failed to demonstrate that any technical knowledge, know-how or skill was made available to the service recipients so as to enable independent use.

The High Court held, “We do not find that the said findings can be stated to be perverse by any stretch. There is no dispute that if the services provided by the Assessee are not of technical nature as stated by the learned ITAT, the Assessee's receipts would not be chargeable to tax as FTS under the Act read with the Indo-US DTAA. In any event, the amount receipt is not chargeable to tax as FIS within the scope of Article 12 of the India US DTAA”

It further concluded that no substantial question of law arose for consideration and dismissed the Revenue's appeal.

The Supreme Court, declining to interfere with the High Court's judgment, dismissed the Revenue's Special Leave Petition, thereby leaving the High Court's ruling undisturbed

For Petitioner: ASG N Venkataraman, AOR Sudarshan Lamba, Adv Udai Khanna, Adv Ishaan Sharma, Adv Gaurang Bhushan, Adv Prerna Dhall, Adv Santosh Kumar Pandey

For Respondent: Senior Advocate Sachit Jolly, Adv Sohum Dua, Adv Abhyudaya Bajpai, AOR Disha Jham