INCOME TAX ACT, 1961

Section 90

Double taxation relief - Agreement between India and Germany - Royalty, Fee for technical services - Subscritpion fee received by assessee from various customers in India for providing access to its online

Assessee based at Germany maintained on line database pertaining to chemical iforamtion which included articles on chemistry topic, substance data and inputs on preparation and reaction methods as experimentally validated. By providing access to database, assessee earned subscription fee from customers worldwide, including India. AO held that subscription fee received by assessee from various customers in India for providing access to its online. database was in the nature of royalty fee for technical services and, therefore, taxable in India.Held: Subscription fee was simply paid for access to literary database under limited non-exclusive and non transferable licence and not for use of copyright of literary database thererfore, same could not be treated as royalty payments. Further assessee had collated data from various journals and articles and put them in a structured manner in the database to make it more user friendly and beneficial to e users/customers desiring to access database. The assessee had neither employed any technical/skilled person to provide any managerial or technical service nor there was any direct interaction between customer/user of database and employees of the assessee. The customer/user was allowed access to online database through various search engines provided through internet connection. None of the features of fees for technical servics as provided under article 12(4) of the Indo-Germany DTAA could be found in subscription fee received by assessee. Accordingly, payment received by assessee being only in the nature of business profit could not be brought to tax in India in the absence of PE.

Supported by: DIT (International Taxation) v. Dun & Bradstreet Information Services India (P) Ltd. (2011) 338 ITR 95 (Bom) : 2011 TaxPub(DT) 1989 (Bom-HC) : (2012) 20 Taxmann.com 695, Dy. CIT v. Welspun Corporation Ltd., (2017) 77 Taxmann.com 165, CIT v. Bharati Cellular Ltd., (2010) 193 Taxman 97 (SC) : 2011 TaxPub(DT) 0394 (SC) and DIT v. A.P. Moller Maersk A.S., (2017) 392 ITR 186 (SC) : 2017 TaxPub(DT) 638 (SC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2011-12

SUBSCRIBE FOR FULL CONTENT