Treaty royalty analysis excludes subscription income for standard database access, with prior precedent controlling the outcome.

Subscription receipts for non-exclusive, non-transferable access to standard online pharmaceutical database reports compiled from public-domain and collected data were examined as alleged royalty under the India-Switzerland DTAA. The Tribunal followed its own earlier ruling in the assessee's case, noting that the treaty royalty clause was materially the same, and held that such receipts did not amount to royalty under the DTAA. As the income was not taxable under the treaty, no adverse examination of the domestic provision was required, and the addition was deleted.

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Issues: Whether subscription income received for access to online pharmaceutical database reports was taxable as royalty under section 9(1)(vi) of the Income-tax Act, 1961 and Article 12(3) of the India-Switzerland DTAA.

Analysis: The subscription receipts arose from access to standard market research reports compiled from publicly available and collected data. The same line of receipts had already been held not to constitute royalty in the assessee's own case for earlier assessment years. Following that binding precedent, and noting that the treaty provision was materially the same as the provision earlier examined, the Tribunal held that the receipts did not amount to royalty under the DTAA. Once the income was not taxable under the treaty, there was no occasion to examine the domestic provision in a manner adverse to the assessee.

Conclusion: The subscription income was not taxable as royalty and the addition was deleted in favour of the assessee.

Ratio Decidendi: Where subscription fees are received for non-exclusive, non-transferable access to a standardized database of compiled public-domain information, and the applicable treaty royalty clause is on par with the clause earlier considered in the assessee's own case, such receipts are not royalty.

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