| The Tax Publishers2019 TaxPub(DT) 5161 (Mum-Trib) INCOME TAX ACT, 1961
Section 9(1)(vi) Article 12
Subscription fees received by the assessee from its Indian customers/subscribers on sale of online product was to be assessed as 'royalty' as per the provisions of section 9(1)(vi) read with article 12 of the India-Ireland DTAA and subjected to tax @ 10% on gross basis.
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Income - Deemed to accrue or arise in India under section 9(1)(vi) - Business or royalty income - Sale of online subscription based product
Assessee was a company incorporated in the Republic of Ireland and was a resident of Ireland. The assessee was engaged in the business of distributing Gartner Groups Research Products in form of subscriptions, both in Ireland, and also through its distributors in the territories where the group does not have a local presence. The areas of industry covered in such subscriptions include technology and telecommunications including hardware, software and systems, services, IT management, market data and forecasts and vertical industry issues. Assessee sells subscriptions to its Indian customers/subscribers, on the basis of which they are able to access Gartner's research products over the internet from its data server which was located outside India. AO held a conviction that the subscription fees was liable to be taxed in India as 'royalty' within the meaning of section 9(1)(vi) and also under article 12 of the India-Ireland Double Taxation Avoidance Agreement ('DTAA'). CIT(A) upheld the order of the AO. Held: This Bench of Tribunal upheld the view taken by CIT(A)that AO had rightly concluded that subscription fees received by the assessee from its Indian customers/subscribers was to be assessed as 'royalty' as per the provisions of section 9(1)(vi) read with article 12 of the India-Ireland DTAA and subjected to tax @ 10% on gross basis as per article 12 of the India-Ireland DTAA.
Assessee's appeal for assessment year 2007-08 in ITA No. 7101/Mum/2010, dated 24-7-2013, assessment years 2003-04, 2005-06, 2008-09, 2009-10 and 2010-11, in ITA Nos. 2619 to 2622/Mum/2014 and ITA No. 4534/Mum/2014, dated 21-9-2016; assessment year 2011-12 in ITA No. 497/Mum/2015, dated 12-4-2017; and assessment year 2012-13 in ITA No. 195/Mum/2016, dated 7-11-2017.
REFERRED : Wipro Ltd. v. ITO (2011) 203 Taxman 621 (Karn) : 2012 TaxPub(DT) 791 (Karn-HC).
FAVOUR : Against the assessee.
A.Y. : 2013-14 & 2014-15
IN THE ITAT, MUMBAI BENCH
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