Relief for Coursera: ITAT Rules Receipts Not Taxable as Royalty or FTS Under India-USA DTAA [Read Order]

The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) granted relief to Coursera Inc. by holding that receipts earned from providing access to online educational courses were not taxable as royalty or fees for technical services (FTS) under the India-USA Double Taxation Avoidance Agreement (DTAA).

Coursera Inc.,appellant-assessee,is a US-based company offering online educational courses in areas like management, data analysis, philosophy, and humanities. It filed its return of income for AY 2022–23 on 31.10.2022, declaring nil income.

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The case was picked for scrutiny under Computer Aided Scrutiny Selection (CASS). During assessment, the Assessing Officer (AO) noted that the assessee had earned ₹156 crore from Indian customers. A show cause notice was issued, proposing to treat the receipts as royalty under the Income Tax Act and the India-USA DTAA, or alternatively, as fees for technical services.

The assessee explained that it only provided an online platform giving users access to courses from universities and companies, and the receipts did not qualify as royalty or FTS under the treaty. The AO disagreed, relying on similar treatment in earlier years (AYs 2020–21 and 2021–22), and passed a draft assessment order on 21.03.2024, taxing the entire receipts.

The assessee raised objections before the Dispute Resolution Panel ( DRP ) , but the panel rejected them.

The two member bench comprising Vijay Pal Rao(Vice President) and Naveen Chandra (Accountant Member) examined the submissions and material on record. The AO had issued a show cause notice along with the draft assessment order dated 21.03.2024. The assessee filed a reply on 24.02.2024, which was not accepted by the AO.

The assessee then raised objections before the DRP. Although the DRP noted that the same issue for AYs 2020–21 and 2021–22 had been decided in favour of the assessee by the tribunal, it still upheld the AO’s findings.

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The appellate tribunal noted that the DRP had maintained the same view as taken in the earlier years and rejected the objections, even though the bench had already ruled in favour of the assessee for AYs 2020–21 and 2021–22. The DRP and AO justified their stance by stating that appeals had been filed before the jurisdictional High Court against those Tribunal orders.

However, the jurisdictional High Court dismissed the Department’s appeals on 19.05.2025 and upheld the tribunal's earlier composite order dated 21.08.2024. The ITAT had observed that the AO failed to bring any material evidence showing that technical knowledge, skill, or know-how was made available to users, and that merely providing access to a platform with a customized interface does not amount to technical services under Article 12(4) of the India-USA DTAA.

It also noted the absence of human intervention and affirmed that payments received were for access to copyrighted content, not for use of copyright.

Citing these decisions, including similar rulings in cases like Elsevier Information Systems GmbH and Relx Inc., the tribunal concluded that the receipts could not be taxed as royalty or fees for technical services.

Accordingly, the bench followed its earlier ruling and the binding decision of the jurisdictional High Court for consistency, and deleted the addition made by the AO.

Therefore, the appeal filed by the assessee was allowed.

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