Online database subscription receipts are not fees for technical services absent human intervention or making available know-how.

Subscription receipts for access to an online legal and tax database were treated as business income rather than fees for technical services, because the arrangement involved only access to compiled electronic content and not the rendering of technical or consultancy services. The record showed no human intervention and no making available of technical knowledge, skill, or know-how to subscribers, so the receipts did not fall within section 9(1)(vii) of the Income-tax Act or Article 12 of the India-USA DTAA. In the absence of a permanent establishment in India, the receipts were therefore not taxable in India as business profits under Article 7 of the DTAA.

---

---

Issues: Whether subscription receipts from access to an online legal database were taxable in India as fees for technical services or other treaty-covered income, and whether, in the absence of a permanent establishment, the receipts could be brought to tax as business profits.

Analysis: The subscription model was found to involve access to a database containing compiled legal and tax in electronic form, with no material showing that the assessee rendered technical or consultancy services to subscribers. The receipts were treated as falling within the line of authority distinguishing access to copyrighted material from use of copyright, and the record did not show human intervention or any making available of technical knowledge, skill, or know-how to customers. On that basis, the receipts did not answer the description of fees for technical services under section 9(1)(vii) of the Income-tax Act, 1961 or under Article 12 of the India-USA DTAA. As the assessee had no permanent establishment in India, the income was held to be business profits not chargeable to tax in India under Article 7 of the DTAA.

Conclusion: The receipts were not taxable as fees for technical services or included services, and in the absence of a permanent establishment they were not taxable in India as business profits.

Ratio Decidendi: Mere access to an online database, without human intervention or making available technical knowledge, skill, or know-how to the subscriber, does not constitute fees for technical services, and such receipts are taxable as business profits only if the non-resident has a permanent establishment in India.

---