Standardised database access is not royalty where no copyright right is transferred, and lockdown delay was treated as valid.

Non-exclusive, non-transferable access to standardised market research reports and databases was treated as payment for factual information products, not for use of copyright or other intellectual property rights, so the receipt was not royalty under the treaty and the domestic addition could not survive. The Tribunal also treated the lockdown period as an extraordinary circumstance for rule 34(5), construing "ordinarily" to allow exclusion of that period from the ninety-day pronouncement timeline. On that basis, the delayed pronouncement was regarded as legally sustainable in the exceptional pandemic setting.

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Issues: (i) Whether consideration received for non-exclusive, non-transferable access to market research reports and databases constituted royalty under section 9(1)(vi) of the Income-tax Act, 1961 and article 12(3) of the applicable tax treaty. (ii) Whether delay beyond ninety days in pronouncing the Tribunal order was justified in the prevailing lockdown circumstances under rule 34(5) of the Income Tax (Appellate Tribunal) Rules, 1962.

Issue (i): Whether consideration received for non-exclusive, non-transferable access to market research reports and databases constituted royalty under section 9(1)(vi) of the Income-tax Act, 1961 and article 12(3) of the applicable tax treaty.

Analysis: The receipts arose from access to standardised database compilations and reports supplied to subscribers on payment. The decisive question was whether such access involved use of, or right to use, copyright or any intellectual property so as to fall within the treaty definition of royalty. The Tribunal followed the binding jurisdictional precedent approving the advance ruling in an identical line of business, where sale or supply of business information reports was held not to amount to royalty and was likened to sale of a book or factual information product rather than transfer of intellectual property rights. As the treaty provision was materially identical and the Revenue pointed out no legally distinguishable feature, the treaty position governed the taxability and excluded the need to examine the domestic provision further.

Conclusion: The amount was not taxable as royalty and the addition could not survive.

Issue (ii): Whether delay beyond ninety days in pronouncing the Tribunal order was justified in the prevailing lockdown circumstances under rule 34(5) of the Income Tax (Appellate Tribunal) Rules, 1962.

Analysis: The Tribunal interpreted the expression "ordinarily" in rule 34(5) as permitting exclusion of the lockdown period from the computation of the pronouncement timeline. It treated the pandemic-related disruption as an extraordinary circumstance, relied on the contemporaneous judicial and administrative measures extending limitation and time-bound orders, and held that a pedantic application of the ninety-day period would be inappropriate in the exceptional situation.

Conclusion: The delayed pronouncement was held to be justified and valid.

Final Conclusion: The tax addition was deleted and the appeal was allowed, while the delayed pronouncement was treated as legally sustainable in the exceptional lockdown period.

Ratio Decidendi: Access to standardised factual databases or reports on a non-exclusive, non-transferable basis does not constitute royalty unless the payer obtains a right to use copyright or another protected intellectual property right; an exceptional lockdown period may be excluded while computing the ordinary time limit for pronouncement of orders.

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