The Commissioner Of Income Internationaltaxation-11[St] Floor, Room v. Alibaba.com Singapore E-Commerceprivate Ltd

Digitallysigned byTRUSHATRUSHATUSHARTUSHARMOHITEMOHITEDate:2023.07.0117:18:36+0530 IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 212 OF 2018 The Commissioner of Income InternationalTaxation-11[st] Floor, Room No.107, Scindia House,Ballard Pier, N.M. Road, Mumbai – 38 ….. Appellant Vs. Alibaba.Com Singapore E-CommercePrivate Ltd.c/o SRBC & Associates LLP, 14[th] Floor, The Ruby, 29, Senapati Bapat Marg,Dadar (West), Mumbai – 400 028….. Respondent Mr.P.C.Chhotaray for Appellant. Mr.P.J.Pardiwalla, Sr.Advocate a/w Mr.Atul K. Jasani forRespondent. CORAM:K.R. SHRIRAM, J &FIRDOSH P. POONIWALLA, J.DATED :JUNE 16, 2023 ORAL JUDGMENT (PER K.R. SHRIRAM, J.): 1.The Respondent i.e. the Assessee is a non-resident companyincorporated in Singapore. The Assessee filed its Return of Incomefor the Assessment Year 2011-12 on September 27, 2011 showing atotal income of NIL. The case was selected for scrutiny and assessedunder section 143(3) read with section 144C (13) of the Income TaxAct, 1961 (‘said Act’). The Assessing Officer (AO) assessed thereturns of the Assessee at Rs.2,73,69,585/- by order dated April 28,2015. The AO denied the benefit of the India-Singapore Double TaxAvoidance Agreement (DTAA) to the assessee by holding that the Mohite 1/22 assessee is merely an intermediary between the Indian subscribersand one Alibaba.com Hong Kong Limited. The AO did not accept thecertificate of incorporation and the Tax Residency Certificate (TRC)issued to the assessee by the authorities in Singapore. 2.The AO also held that the assessee had a ‘business connection’in India by way of its agreement and transactions withM/s.Infomedia 18 Pvt. Ltd. (Infomedia) an Indian company, andtherefore, the assessee’s income was taxable in India as per theprovisions of section 9(1)(i) of the said Act. The AO also held that in the alternative, the payments made bythe Indian subscribers to the assessee was also taxable in India asFees for Technical Services (FTS) within the meaning of the said Act,as well as the DTAA. 3.The Dispute Resolution Panel (DRP) confirmed the order of theAO in respect of denial of treaty benefit. The DRP also heldInfomedia was a dependent agent permanent establishment (DAPE).The DRP accordingly held that there was a permanent establishment/ business connection of the assessee in India and its income wastaxable in India as a business profit / business income. The DRP,however, rejected the argument of the AO that the paymentsreceived by the assessee was not taxable in India as FTS. The assessee and the department filed Appeals and Cross-Appeals beforethe ITAT, Mumbai against the directions of the DRP for theAssessment Years 2009-10, 2010-11 and 2011-12 as the issuesinvolved in all these three assessment years were identical. TheDepartment also filed an Appeal before the ITAT against the decisionof the DRP. All the Appeals were disposed by the ITAT vide commonorder dated November 30, 2016. All Appeals of the Departmentwere dismissed and the Appeals of Respondent assessee wereallowed. 4.It is this order dated November 30, 2016 of the ITAT that isimpugned in the Appeal by the Revenue and the following questionsof law are proposed: “A.Whether on the facts and in the circumstances of thecase and in law, the Hon’ble ITAT has erred in holding thatInfomedia 18 Pvt. Ltd. does not constitute a ‘businessconnection’ of the assessee in India under the provisions ofsection 9(1)(i) of the Income Tax Act, 1961 (the Act) andaccordingly, the income of the assessee was not taxable inIndia as business income? B.Whether on the facts and in the circumstances of thecase and in law, the ITAT has erred in holding that Infomedia18 Pvt.Ltd. does not constitute a ‘permanent establishment’ ofthe assessee in India under the provisions of Article 5 of theDTAA between India and Singapore and, accordingly, the “A.Whether on the facts and in the circumstances of thecase and in law, the Hon’ble ITAT has erred in holding thatInfomedia 18 Pvt. Ltd. does not constitute a ‘businessconnection’ of the assessee in India under the provisions ofsection 9(1)(i) of the Income Tax Act, 1961 (the Act) andaccordingly, the income of the assessee was not taxable inIndia as business income? B.Whether on the facts and in the circumstances of thecase and in law, the ITAT has erred in holding that Infomedia18 Pvt.Ltd. does not constitute a ‘permanent establishment’ ofthe assessee in India under the provisions of Article 5 of theDTAA between India and Singapore and, accordingly, the income of the assessee was not taxable in India as businessprofit under the provisions of Article 7 thereof? C.Without prejudice, whether on the facts and in thecircumstances of the case and in law, the ITAT has erred inholding that the payments made by the Indian Suppliers to theassessee is not taxable in India as Fee for Technical Services(FTS) under the provisions of section 9(1)(vii) of the Act? D.Without prejudice, whether on the facts and in thecircumstances of the case and in law, DTAA between India andSingapore would be applicable and whether therefore, theITAT has erred in holding that the payments made by theIndian Suppliers to the assessee is not taxable in India as Feefor Technical Services (FTS) under the provisions of Article 12of the DTAA? E.Any other questions of law may be allowed to be addedeither by leave of the Court or filing appropriate proceedings,the Appellant reserves the right to do so.” 5.The assessee, Alibaba.com Singapore E-Commerce Private Ltd.,is a company incorporated under the laws of Singapore and the sameis evidenced from the certificate of incorporation. The Assessee wasincorporated on November 06, 2011 in Singapore. The documentindicates that the entire control and management of the assessee isfrom Singapore. 6.Since the entire control and management of the company is from Singapore, therefore, in terms of Article 4 of Indo-SingaporeDTAA, it is a tax resident of Singapore, holding a valid ‘tax residentcertificate’ which has been placed in the paper book. The entirestructure of various holding companies of the ‘Alibaba.com Group’shows the immediate holding company is ‘Alibaba.com International(BVI) Holding Ltd.’, a company incorporated in British Virgin Islandand the ultimate holding company is ‘Alibaba.com Ltd.’, a companyincorporated in Cayman Island. The Group Structure Chart ofAlibaba.com Group has been explained in the impugned order asunder:- 6.Since the entire control and management of the company is from Singapore, therefore, in terms of Article 4 of Indo-SingaporeDTAA, it is a tax resident of Singapore, holding a valid ‘tax residentcertificate’ which has been placed in the paper book. The entirestructure of various holding companies of the ‘Alibaba.com Group’shows the immediate holding company is ‘Alibaba.com International(BVI) Holding Ltd.’, a company incorporated in British Virgin Islandand the ultimate holding company is ‘Alibaba.com Ltd.’, a companyincorporated in Cayman Island. The Group Structure Chart ofAlibaba.com Group has been explained in the impugned order asunder:- 7.During years under consideration, the assessee has transactedwith ‘Alibaba.com Hong Kong Ltd.’ (Alibaba Hong Kong) by way ofavailing of a Web Hosting and related services. It has been clarifiedthat Alibaba Hong Kong is not the parent company of the assessee ashas been wrongly mentioned and presumed by the A.O. in theimpugned assessment order. The Assessee has been regularly filingits accounts with Singapore Corporate Law authorities and itsIncome-Tax return with Singapore Tax authorities. The notice ofassessment issued by the Singapore Tax authorities is alsoproduced. Regarding the operating model of the assessee,Mr.Pardiwalla submitted that the Alibaba website, that is,www.alibaba.com, is commonly used by the entire Alibaba Group andservices are being provided to the suppliers from all across thecountries including India but excluding China, Hong Kong andMacau. The website facilitates Indian suppliers to do business onlinethrough a global trade market place. Indian subscribers subscribe tothe assessee’s service / facility offering under the “InternationalTrust Pass” (ITP) and “Gold Suppliers Services Arrangement” (GSS)for which it charges a service fee. Through this subscription, theIndian subscribers place there storefront and have their productsadvertised/listed when visitors go to the website for search ofproducts required by them. The entire subscription revenue is received by the assessee from the customers / subscribers all overthe world including from the Indian subscribers in its own right andit alone is the beneficial and legal owner of the entire revenuecollected on which it pays the taxes in Singapore. The assessee is aglobal company which provides the subscription services to thecustomers all across the world and it is a hub of Alibaba GroupGlobal business, except in China and Hong Kong. ‘Alibaba.com Ltd.’is only the owner of IPR and has the copyright with respect to thetrademarks and brand name “Alibaba” and Alibaba logo. It is also theowner of the domain name of Alibaba.com. Only the website isoperated by a Group Company, ‘Alibaba.com Hong Kong Ltd.’. Theservers which host the website are located in California USA. Innutshell, it has been pointed out that, firstly, Alibaba.com Ltd. is theowner of the IPR and of the domain name Alibaba.com; secondly, thewebsite is operated by Alibaba Hong Kong; and lastly, the server islocated in California USA. The assessee is doing online businessproviding business to business services (B2B services). It is akin todigital yellow pages. Earlier the yellow pages used to provide theinformation regarding various business and trading entities withtheir product and services, and customers who were looking orsearching for such product and services would refer to the yellowpages. The assessee is also providing same kind of facility by providing portal for giving information about the different productand services in the electronic form. Explaining the brief overview ofthe subscription arrangement for the services, Mr.Pardiwallasubmitted that: a. The subscribers would register with the Companyavailing services provided by the assessee (i.e., puttingadvertisements on its website) by agreeing to the terms of theITP/GSS agreement and payment of the applicable fees; providing portal for giving information about the different productand services in the electronic form. Explaining the brief overview ofthe subscription arrangement for the services, Mr.Pardiwallasubmitted that: a. The subscribers would register with the Companyavailing services provided by the assessee (i.e., puttingadvertisements on its website) by agreeing to the terms of theITP/GSS agreement and payment of the applicable fees; b. The company would then authenticate and verify thedetails provided by the Subscribers through a third partyagency; c. Each subscriber would be given an Account upon receiptof payment by the Company and successful authentication andverification by the third party agency; d. Once the Account is received by the Subscribers, theycould proceed to display information about their business,products sold and offer to buy or sell products or services forvisitors to the assessee’s Website to browse; e. The users would click on the products that they wish tobuy the further details about such products for contract detailsof the Subscriber, who has displayed / advertised the product;and f. The subscribers and the buyers reach out to each otherand the communication is taken forward independentlywithout any participation or involvement of the assesee. Thelimited role of the assessee is to provide a facility of posting anadvertisement or displaying of the information about productof services in the electronic form (i.e., similar to digital YellowPages). To explain the process followed by the assessee, assessee hadalso filed copy of screen shots of the site displayed in the computeras to how the products and services are displayed on the Alibabawebsite and how it is being used by the subscribers. Mr.Pardiwallasubmitted the assessee has a very limited role which is merelyconfined to providing facility of posting and advertising or displayingof the information about the product and services in the ElectronicForm. 8.It is the case of the department,as submitted by Mr.Chhotaray,and as appears from the finding and observation of the AO in theAssessment Order, that alibaba.com is the trademark of Alibaba.comHong Kong Company as the website is registered in Hongkong andnot in Singapore. Therefore, entire activities are carried fromHongkong. According to the AO, the assessee has not produced any document to show that the website www.alibaba.com belongs to acompany based in Singapore. The AO further notes that the TrustPass Agreement (TPA) between the Indian subscribers and theassessee refers to the terms and conditions for use of the website,product listing policy, privacy policy etc., and according to the AO,these kinds of policies can be entered only by a company which ownsthe website and in this case it is the Hong Kong Company. The AOconcludes that the assessee has nothing to do with the subscriptionservices as everything is done by Alibaba.com Hong Kong. Even theIPR etc. belongs to the Hong Kong Company. Mr.Chhotaraysubmitted that from the website of www.alibaba.com, the AO hastaken note of various addresses of the Alibaba entities and theirplace of global businesses and noted that Alibaba.com has office inIndia and there is absolutely no mention about presence of Alibabain Singapore on its website. 9.The entire thrust of the AO is that not only the website isowned by Alibaba.com Hong Kong, but also entire subscriptionservices are provided by the said Hong Kong Company, and, since,India and Hong Kong do not have a DTAA, the benefit under DTAAwill not be applicable to the assessee. The AO, on the issue ofapportionment of income in the hands of the assessee, thereafter concluded that revenue of the assessee is partly taxable as “Royalty”partly as “Fee for technical services”, and partly as businessreceipts. The Revenue’s stand as concluded by AO can besummarized in the following manner: 9.The entire thrust of the AO is that not only the website isowned by Alibaba.com Hong Kong, but also entire subscriptionservices are provided by the said Hong Kong Company, and, since,India and Hong Kong do not have a DTAA, the benefit under DTAAwill not be applicable to the assessee. The AO, on the issue ofapportionment of income in the hands of the assessee, thereafter concluded that revenue of the assessee is partly taxable as “Royalty”partly as “Fee for technical services”, and partly as businessreceipts. The Revenue’s stand as concluded by AO can besummarized in the following manner: “a)Alibaba Singapore is not eligible to avail the benefits of theIndia-Singapore Tax Treaty on the grounds that, firstly, the assesseehas no presence in Singapore and that the entire management of theassessee is based in Hong Kong; secondly, the Services to the IndianSubscribers are provided by Alibaba Hong Kong, since it is the ownerof the Website; and lastly, the Website is a trade mark of AlibabaHong Kong; b)Information constitutes a ‘business connection’ for theassessee in India since the definition of business connection is aninclusive one; c)The subscription fees earned is partly in the nature of businessincome, royalty and fees for technical services; d)Business income:- The term ‘source’ does not mean the locationof the payer, but the place where profit-making activities are carriedout. In other words, source is a ‘profit-making apparatus’, and sincethe Website constitutes a profit making apparatus for whichpayments are made to the assessee by the subscribers, therefore, income is deemed to accrue or arise in India under section 9(1)(i) ofthe Act. e)Fees for Technical Services:- The subscription fees earned is inthe nature of fees for technical services on the ground that the scopeof term ‘fees for technical services’ is very wide and needs to beinterpreted very broadly. The issue of taxability under Royalty had been rejected by theDRP and department did not challenge this aspect. Therefore, thisissue was not a dispute before ITAT. The AO eventually assessed the total taxable income of theassessee as business income and taxed the assessee accordingly. 10.The DRP, except on the issue of ‘royalty’, upheld theconclusion and contention of the Assessing Officer. The DRP alsoupheld that the assessee is ineligible to the claim of the benefit ofIndia Singapore DTAA, because the assessee is only an intermediarybetween Indian subscribers and Alibaba Hong Kong. Therelationship between Infomedia and Alibaba Hong Kong is highlyinterlinked and interdependent, therefore, it cannot be reckoned asan independent agent. The assessee has been allowed to havebusiness connection and permanent establishment in India in the form of Infomedia. The DRP accordingly directed that incomeattributable to the business connection shall be interalia, 50% of theremittance received by the assessee from Infomedia. The ITAT hasobserved that the DRP, however, does not provide any basis /rational with respect to the adoption of attribution @ 50%. 11.As noted in the impugned order of ITAT, the CIT DR, mostlyrelied upon the various observations made by the Assessing Officerand DRP. After referring to the decision of the Hon’ble SupremeCourt in the case of Vodafone International Holdings B.V. vs. UOI[1], itwas submitted that the Income Tax Department can ignore the taxresidency certificate provided by the foreign tax authorities andthen in such situation the treaty benefit can be denied. form of Infomedia. The DRP accordingly directed that incomeattributable to the business connection shall be interalia, 50% of theremittance received by the assessee from Infomedia. The ITAT hasobserved that the DRP, however, does not provide any basis /rational with respect to the adoption of attribution @ 50%. 11.As noted in the impugned order of ITAT, the CIT DR, mostlyrelied upon the various observations made by the Assessing Officerand DRP. After referring to the decision of the Hon’ble SupremeCourt in the case of Vodafone International Holdings B.V. vs. UOI[1], itwas submitted that the Income Tax Department can ignore the taxresidency certificate provided by the foreign tax authorities andthen in such situation the treaty benefit can be denied. 12.It was submitted by the Revenue that the assessee had nopresence in Singapore and the entire management as well as theservices provided to the Indian subscribers is through Alibaba HongKong based at Hong Kong and not at behest of the assessee, that is,Alibaba Singpore. It was submitted that the assessee does not have apermanent establishment in terms of Article 5(8a) and 5(8c) in theform of Infomedia, that is, it would constitute a dependent agent ofpermanent establishment of assessee in India. 13.We find, the ITAT, after hearing the rival submissions, hasgiven extensive factual findings as to why the conclusion of the AOas well as DRP were erroneous. 14.We have also considered the orders passed by the AO and theDRP. As correctly noted by the ITAT, the entire focus of the AO isthat the website www.alibaba.com is registered in Hong Kong and isthe trademark of Alibaba Hong Kong. AO has completely denied theexistence of the assessee as an independent entity as if the assesseewas only a front or a shadow entity of Alibaba Hong Kong. If the AOwas so convinced that the entire activity in India to varioussubscribers was actually carried out by Alibaba Hong Kong and notby assessee, then we would have expected him to do something toAlibaba Hong Kong and not the assessee. 15. The ITAT has considered various documentary evidences,including the Tax Residency Certificate of assessee, and has come toa factual finding that it cannot be held that assesseee is either non-existent entity or some kind of conduit of Alibaba Hong Kong whichis not even the parent company. The ITAT has even reproduced agroup structure of Alibaba.com and has come to a conclusion thatAlibaba.com Hong Kong is a separate entity than the assessee. Thereis a finding of fact that the assessee has been incorporated under thelaws of Singapore and a tax residency certificate has been issued by 15. The ITAT has considered various documentary evidences,including the Tax Residency Certificate of assessee, and has come toa factual finding that it cannot be held that assesseee is either non-existent entity or some kind of conduit of Alibaba Hong Kong whichis not even the parent company. The ITAT has even reproduced agroup structure of Alibaba.com and has come to a conclusion thatAlibaba.com Hong Kong is a separate entity than the assessee. Thereis a finding of fact that the assessee has been incorporated under thelaws of Singapore and a tax residency certificate has been issued by the Inland Revenue Authority of Singapore. The tax residency andresidence status of the assessee is also established by filingcertificate of incorporation of assessee. It shows it was incorporatedin Singapore on November 06, 2007. Audited financial statementsand the return of income of the assessee for the relevant years,which have been filed before the Singapore Authorities, showsubscription fees received by the assessee from the subscribers allover the world, including from India, as its own income. The ITAThas concluded that these facts go to show that the assessee alone isthe economic owner of the subscription it received from Indiansubscribers and it receives the revenue in its own right and not onbehalf of Alibaba Hong Kong. The ITAT has also taken note of thenotice of assessment issued by Singapore Tax Authorities and hascome to the conclusion that not only the assessee is assessed inSingapore but the place of control and management of the assesseeis also in Singapore. The ITAT has also considered the meeting of theboard of directors of assessee, web-based agreement betweenAlibaba Hong Kong and the assessee to come to the conclusion thatAlibaba Hong Kong has absolutely no connection or contract withthe Indian subscribers or assessee’s customers in India and that thecontractual rights, privileges and liabilities of the assessee under theagreement with the Indian subscribers wholly lie with the assessee. The ITAT also came to a finding that only the alibaba.com logo isregistered in Hong Kong and assessee only uses the website ofalibaba.com. There are various factors which have been consideredby ITAT to come to its conclusion. For the sake of brevity, we are notreproducing all those findings which persuaded ITAT to come to theconclusion that it was not agreeing with the view taken by DRP aswell as the AO that either assessee is not a tax resident of Singaporein terms of India Singapore DTAA or that the benefit should not begiven to the assessee. 16.The ITAT has also held that the tax residency certificate issufficient to determine the proof of residency and the income-taxauthorities cannot ignore the valid tax residency certificate issuedby the Government authority of the other contracting state, that is,Singapore. 17.The ITAT also rejected the submissions of the revenue, relyingon Vodafone International Holdings B.V. (Supra), that the I.T.authorities have blanket powers to negate or ignore the taxresidency certificate given to the assessee by Singapore TaxAuthority. The ITAT held that the Hon’ble Supreme Court, in thatcase, only observed that the Tax residency certificate does notprevent the tax authority to enquire into a possible tax fraud, whichis not even the allegation in the matter at hand. 16/22 16.The ITAT has also held that the tax residency certificate issufficient to determine the proof of residency and the income-taxauthorities cannot ignore the valid tax residency certificate issuedby the Government authority of the other contracting state, that is,Singapore. 17.The ITAT also rejected the submissions of the revenue, relyingon Vodafone International Holdings B.V. (Supra), that the I.T.authorities have blanket powers to negate or ignore the taxresidency certificate given to the assessee by Singapore TaxAuthority. The ITAT held that the Hon’ble Supreme Court, in thatcase, only observed that the Tax residency certificate does notprevent the tax authority to enquire into a possible tax fraud, whichis not even the allegation in the matter at hand. 16/22 18.On the issue of as to whether assessee has any businessconnection in India in the form of Infomedia and whether Infomediaconstitutes a dependent agency PE for the assessee in India, theITAT first of all reiterates the finding it gave to the first issue onapplicability of India-Singapore DTAA which was given afterconsidering the business / operating model of the assessee in India.Thereafter, ITAT came to the conclusion on facts that assessee haslimited role as its role is confined to facilitate the posting of theadvertisement or displaying of the information about the productand services in the electronic form in to the web portal. The ITAThas come to a factual finding that the subscribers and the buyersreach out to each other from the information provided by theassessee and the communication is taken forward independently bythe parties without any participation or involvement of the assessee,and most importantly, the assessee neither maintains a stock ofproduct for Indian subscribers nor undertakes any delivery onbehalf of the Indian subscribers. The ITAT has also come to afactual finding that assessee is neither involved in the supply ofgoods or provision of services or involved in any financialtransaction, i.e. transfer of sale price from purchaser to seller. 19.After considering the Co-operation Agreement betweenassessee and Infomedia, the ITAT has come to a finding thatMohite 17/22 Infomedia, a listed company which specializes in the business ofdirectories, magazine publishing, direct marketing etc., permittedassessee’s website and also provided customer support and aftersales support. Infomedia also provided payment collection servicesfrom subscribers in India etc. for which Infomedia was paidremuneration by assessee ranging between 40% to 50% plus cashbonus depending upon the target achieved by Infomedia as per theterms of the Co-operation Agreement. 20.In light of these documents and facts, the ITAT afterconsidering the provisions of section 9(1) (i) r/w Explanation 2 andthe proviso to the explanation, came to a finding that the assesseecannot be reckoned to have any kind of business connection in Indiain the form of Infomedia. 21.On the reliance of the judgments of the Apex Court in the caseof the Commissioner of Income-tax, Punjab vs. R.D.Aggarwal and Co.and another[2] and Anglo French Textile Co.Ltd. vs. Commissioner ofIncome-tax, Madras[3], ITAT very clearly came to the conclusion thatthese decisions were rendered much prior to the insertion ofExplanation 2 to section 9(1)(i) which was inserted by the FinanceAct, 2003, w.e.f., April 01, 2004. The Explanation 2 read withproviso categorically excludes from the purview of business242 ITR 155323 ITR 101 21.On the reliance of the judgments of the Apex Court in the caseof the Commissioner of Income-tax, Punjab vs. R.D.Aggarwal and Co.and another[2] and Anglo French Textile Co.Ltd. vs. Commissioner ofIncome-tax, Madras[3], ITAT very clearly came to the conclusion thatthese decisions were rendered much prior to the insertion ofExplanation 2 to section 9(1)(i) which was inserted by the FinanceAct, 2003, w.e.f., April 01, 2004. The Explanation 2 read withproviso categorically excludes from the purview of business242 ITR 155323 ITR 101 connection the activities of an independent agent acting in theordinary course of their business. The ITAT also relied uponCircular 7 of 2003 dated May 09, 2003 issued by CBDT whichclarified that the term “business connection” would not include thecases of business activities being carried out through, interalia, anyindependent agent if any such independent agent is acting in theordinary course of its business. Therefore, this is also a factualfinding of ITAT. 22.While coming to its conclusion on the independence ofInfomedia, the ITAT has held on facts that Infomedia has enteredinto several collaborations with other partners like assessee andassessee does not have any financial, managerial or any other typeof participation in Infomedia, that Infomedia carries out host ofother activities for other clients and Infomedia is an independententrepreneur. Further while dealing with the assessee, Infomediahas been compensated for its services by the assessee. ITAT also hasconcluded on facts that the activities of Infomedia under the “Co-operation Agreement” with the assessee is in the ordinary course ofbusiness and in no way it is dedicated wholly or almost wholly to theassessee. 23.After arriving at these factual findings, ITAT came to theconclusion that when Infomedia is not a dependent agent, then, in view of Explanation 2, r/w proviso to section 9(1)(i), the income ofthe assessee cannot be held to be deemed to accrue or arise in Indiain terms of section 9(1)(i) of the Act. Once the income of theassessee cannot be taxed as business income in India under 9(1)(i)then it is not necessary to go into the DTAA. 24.On the revenue’s appeal, where it had challenged the DRP’sdirection that the revenues received from India are taxable as “Feesfor Technical Services” @ 10% under provisions of section 9(1)(vii)of the Act on the ground that scope of the terms of fees for technicalservices used in the said section is very wide which needs to bebroadly interpreted, the ITAT has not accepted the observation ofthe AO because there was nothing to indicate the source based onwhich the AO has made observation that that assessee within andoutside India has rendered various kind of services as has beenhighlighted by the AO in paragraphs 37 and 38 of the AssessmentOrder. 25.After considering the facts, the ITAT has come to theconclusion that activities highlighted by the AO are not carried outby the assessee at all and the services provided by the assessee tothe Indian Customers were merely that of displaying / storing ofdata of Indian Subscribers, such services are limited to provision ofE-commerce platform for advertising of products or services in India. The ITAT came to the factual finding that the arrangementbetween assessee and the subscribers was for the provision ofservices for standard facility and not for “rendering of any technical,managerial or consultancy services” as provided in section 9(1)(vii)r/w Explanation 2 of the Act. 25.After considering the facts, the ITAT has come to theconclusion that activities highlighted by the AO are not carried outby the assessee at all and the services provided by the assessee tothe Indian Customers were merely that of displaying / storing ofdata of Indian Subscribers, such services are limited to provision ofE-commerce platform for advertising of products or services in India. The ITAT came to the factual finding that the arrangementbetween assessee and the subscribers was for the provision ofservices for standard facility and not for “rendering of any technical,managerial or consultancy services” as provided in section 9(1)(vii)r/w Explanation 2 of the Act. 26.The ITAT has also relied upon the judgment of the Apex Courtin the case of Commissioner of Income-tax-4, Mumbai vs. KotakSecurities Ltd.[4] and held that constant human endeavour or humanintervention is essential requirement for treating the rendering ofservices as “technical”. If any technology or a process has been putto operation automatically, wherein it operates without muchhuman interface or intervention, then such technology per se cannotbe held as rendering of technical services by human skills. Wherethere is a standard facility made available for public at large,without giving any special or exclusive services whether to aparticular client or class of clients, then it cannot be brought withinthe ambit of technical services as stipulated in Explanation 2 tosection 9(1)(vii). Therefore, on facts, even these grounds of theRevenue were correctly rejected in coming to a finding that notechnical services had been provided by the Assessee to treat thesubscription fees as to be in the nature of fees for technical services. 4383 ITR 1 (SC) 27. In the circumstances, the entire subject matter of the appeal isfact based and in our view, no substantial question of law arises. 28.Appeal dismissed. (FIRDOSH P. POONIWALLA, J) (K.R. SHRIRAM, J) 22/22