Royalty on online database subscriptions upheld where binding High Court precedent covered the same transaction.

Subscription payments for online access to a research database were treated as royalty under section 9(1)(vi) of the Income-tax Act and Article 12 of the India-Ireland DTAA. The Tribunal relied on a Karnataka High Court ruling on the same transaction, which had already held that consideration for online use of the database constituted royalty and triggered tax deduction obligations. In light of that binding precedent, the Tribunal declined to follow contrary Tribunal decisions and upheld taxability of the receipts as royalty.

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Issues: Whether the subscription payments received from Indian customers for online access to research products were taxable as royalty under section 9(1)(vi) of the Income-tax Act, 1961 and Article 12 of the India-Ireland Double Taxation Avoidance Agreement.

Analysis: The payment was for access to the assessee's online database and research products. The Tribunal noted that the Karnataka High Court had already held, in the payer's case arising from the same transaction, that such payment amounted to royalty and attracted tax deduction obligations. In view of that binding decision, the Tribunal declined to adopt a contrary view despite reliance on contrary Tribunal orders.

Conclusion: The receipts were taxable as royalty, and the assessee's challenge failed.

Ratio Decidendi: Where the High Court has conclusively held that consideration for online use of a database amounts to royalty in respect of the same transaction, the Tribunal cannot take a contrary view in the payee's case.

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