Subscription fee on e-magazines with standardised content does not partake character of ‘FTS’

In Brief

The Delhi High Court has reinstated its view that the expression ‘rendering of managerial, technical or consultancy services’ under Explanation 2 to section 9(1)(vii) of the Income-tax Act, 1961 (the Act) must necessarily be construed in a narrow sense by applying the rule of noscitur a sociis. The High Court held that the subscription fee collected by a taxpayer from various third parties for subscription to e-magazines and content, which is standardised and not specifically collected or generated for any particular entity, would not partake the character of ‘fees for technical services’ (FTS) within the meaning of Explanation 2 to section 9(1)(vii) of the Act.