Coursera’s Receipt Not Chargeable To Tax As FIS U/A 12 India US DTAA: Delhi High Court

The Court dismissed the Appeal filed by the Revenue under Section 260A of the Income Tax Act, 1961, (ITA), impugning an Order of the Income Tax Appellate Tribunal (ITAT) for Assessment Year (AY) 2020-21 and 2021-22 respectively. The ITAT had allowed the aforesaid Appeals preferred by Coursera Inc. (Respondent/Assessee) assailing the final assessment order.

A Division Bench of Justice Vibhu Bakhru and Justice Tejas Karia 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.”

SSC Puneet Rai appeared for the Appellant.

Brief Facts

The Court had to determine whether the Assessee's receipts were chargeable to tax as FIS (Fees for Included Services) under the Indo-US DTAA (Double Taxation Avoidance Agreement). The ITAT had held that the services provided by the Assessee did not include any element of included services and, therefore, the Assessee's receipts were not chargeable to tax as FIS under the Indo-US DTAA.

Court’s Reasoning

The High Court remarked, “The learned ITAT did not find merit in the Revenue’s contention that the Assessee had provided any technical services, especially the once which involved human intervention. Accordingly, the learned ITAT rejected the contention that the Assessee’s receipts were chargeable to tax under the Indo-US DTAA as FIS.”

“The Assessee filed his objections before the Dispute Resolution Panel [DRP]. The DRP considered the Assessee’s objections. The DRP was not persuaded by the objections raised by the Assessee. However, it took note of the submission that the AO had not factually examined the terms and conditions of the agreement, which was picked up by the AO, namely the services that were, in fact, rendered in terms of the agreement with Gandhi Institute of Technology and Management. Accordingly, the DRP issued directions to the AO to verify the Assessee’s contentions,” the Bench noted.

The Bench further noted, “The Assessee claimed that by virtue of paragraph 4 of Article 12 of the DTAA its receipts cannot be treated as FIS as the Assessee did not make available any technical knowledge, experience, skill, know-how, or processes. The Assessee claimed that its services were confined to offering its platform for access to various courses conducted by other institutions/ organisations.”

Consequently, the Court ordered, “It is clear from the above that the learned ITAT’s conclusion that the services provided by the Assessee did not include any element of included services and, therefore, the Assessee’s receipts were not chargeable to tax as FIS under the Indo-US DTAA, is based on the findings of fact in respect of the services rendered by the Assessee.”

Accordingly, the High Court dismissed the Appeal.

Cause Title: Commissioner Of Income Tax, International Taxation-1 v. Coursera Inc. (Neutral Citation: 2025:DHC:3997-DB)

Appearance:

Appellant: SSC Puneet Rai; JSCs Ashvini Kumar, Rishabh Nangia, and Gibran; Advocate Nikhil Jain

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