DCIT Vs Alibaba.com Singapore ECommerce Pvt. Ltd. (ITAT Mumbai)
Alibaba Subscription Fees Not FTS—Platform Is Mere Standard Facility; No Human Intervention, No “Make Available”
The Revenue filed three appeals against CIT(A)-5, Mumbai’s orders dated 13.02.2025 deleting additions made by AO by treating subscription receipts earned by Alibaba.com Singapore E-Commerce Pvt. Ltd. from Indian customers as Fee for Technical Services (FTS) under section 9(1)(vii) and Article 12 of India–Singapore DTAA.
1. Grounds 1 & 2—Infructuous (No Infomedia 18 issue in these years)
The Department mistakenly raised grounds alleging business connection / PE via Infomedia 18 Pvt Ltd, but both sides confirmed that the agreement with Infomedia ended in 2010 and was replaced by Alibaba India. Hence, these grounds were dismissed as not arising from the impugned orders.
2. Core Issue—Are subscription fees FTS?
Alibaba Singapore operates the global B2B platform www.alibaba.com.
The India model involved a principal-to-principal reseller arrangement:
• Alibaba India purchased subscriptions from Alibaba Singapore;
• Alibaba India sold them to Indian subscribers;
• Subscribers merely received an online account to upload business details and product listings;
• No human interface, no advisory, no consultancy, no customised service;
• The platform simply acted as a digital Yellow Pages facility.
The AO, however, taxed the subscription receipts (₹6.31 cr, ₹5.52 cr, ₹7.11 cr in the three years) as FTS, relying on generic observations about managerial/technical services.
3. Tribunal’s Analysis—Issue already settled in Assessee’s favour
The Tribunal noted that the identical issue stood decided for AYs 2009-10, 2010-11 & 2011-12, where both the ITAT and the Bombay High Court (2023) held that Alibaba’s services are not FTS.
The earlier ITAT order (quoted extensively in this judgment) held:
• The platform merely stores/displays data of subscribers;
• It is a standard automated facility, not a technical/managerial/consultancy service;
• Human intervention is absent—as required by Kotak Securities (SC);
• A facility universally available to all users cannot be FTS;
• No “make available” of technical knowledge under DTAA;
• No transfer of technical plan, know-how or skill.
The Bombay High Court (ITA 212/2018, dated 16.06.2023) affirmed that:
• AO’s findings were factually incorrect;
• The platform is merely an e-commerce display facility;
• Standard facility ≠ technical services;
• Human intervention is essential for FTS—absent here.
4. Tribunal’s Conclusion
Since the facts, subscription model and platform operations are identical in AYs 2014-15 to 2016-17, and higher judicial authorities have already ruled in favour of the Assessee, the ITAT held that:
Subscription receipts from India are NOT FTS under section 9(1)(vii) AND are NOT FTS under Article 12 of the India–Singapore DTAA.
Accordingly, all grounds of the Revenue were dismissed.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
