Consideration For Accessing Database Cannot Be Treated As 'Royalty' Under India-US DTAA: ITAT
The Delhi Bench of Income Tax Appellate Tribunal (ITAT)has ruled that the consideration for accessing Database cannot be treated as 'Royalty' under India-US Double Taxation Avoidance Agreement (DTAA). The two-member bench of Challa Nagendra Prasad (Judicial Member) and N.K.Billaiya (Accountant Member) has observed that the purchaser of the book does not acquire the right to exploit...
The Delhi Bench of Income Tax Appellate Tribunal (ITAT)has ruled that the consideration for accessing Database cannot be treated as 'Royalty' under India-US Double Taxation Avoidance Agreement (DTAA).
The two-member bench of Challa Nagendra Prasad (Judicial Member) and N.K.Billaiya (Accountant Member) has observed that the purchaser of the book does not acquire the right to exploit the underlying copyright, when the purchaser reads the book, he only enjoys the contents. Similarly, the user of the database does not receive the right to exploit the copyright in the database; he only enjoys the product in the normal course of his business.
The appellant/assessee, a business corporation incorporated in the USA and engaged in the business of providing information products and services containing global business and financial news to organisations worldwide. It offers information via newspapers, newswires, websites, applications, newsletters, magazines, proprietary databases, conferences and radio.
The appellant company appointed Dow Jones Consulting India Pvt Ltd (DJCIPL) on a principal to principal basis for distributing its products in the Indian market. Accordingly, the appellant company receives purchase price from DJCIPL at an arm's length price.
During the course of scrutiny assessment proceedings, the Assessing Officer was of the firm belief that the receipts from DJCIPL should be taxed in India as 'Royalty Income" under the provisions of the Act as well as India-USA DTAA.
Counsel for the assessee vehemently stated that the assessee has received consideration for providing use of database by which it has allowed DJCIPL to used its copyright and has not given any coy of right, therefore, the impugned receipts cannot be taxed as 'Royalty' in the hands of the assessee.
The ITAT noted that there was no transfer of legal title in the copyrighted article as the same rests with the assessee. All rights, title and interest in the licensed software claimed to be copyrighted are the exclusive property of the assessee. DJCIPL has no authority to reproduce the date in any material form to make any translation in the date or to make adaptation in the data.
The tribunal opined that in determining whether or not a payment is for use of copyright, it is important to distinguish between 'a payment for right to use the copyright in a program' and 'right to use the program itself'.
Case Title: M/s Dow Jones & Company Inc. Versus A.C.I.T.
Citation: ITA No. 7364/DEL/2018
Counsel For Appellant: Advocate Dhanesh Bafna
Counsel For Respondent: Departmental Representative Anupama Anand