Online database subscription fees are not royalty or technical services where no copyright right or human-led service is transferred.

Subscription fees for access to an online database were held not to be royalty or fees for technical services under domestic law or the India-UK DTAA. The arrangement gave only non-exclusive access to compiled information and did not transfer any right to use copyright or other intellectual property in the underlying content. The payment was for access to copyrighted material, not use of copyright, and no managerial, technical or consultancy service with human intervention was rendered. The receipts were treated as business income, and in the absence of a permanent establishment in India, they were not taxable in India.

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Issues: Whether the subscription fee received from Indian customers for access to an online database was taxable in India as royalty or fees for technical services under domestic law and the India-UK DTAA.

Analysis: The subscription arrangement granted only non-exclusive access to a database of collated information and did not transfer any right to use copyright or any other intellectual property in the underlying content. The payment was for access to copyrighted material, not for use of copyright. The service element necessary to constitute fees for technical services was also absent, as no managerial, technical, or consultancy service was rendered and there was no human intervention in providing access. The receipts were therefore characterized as business income, and in the absence of a permanent establishment in India, they were not taxable in India.

Conclusion: The subscription fee was not royalty or fees for technical services under the India-UK DTAA or the Act, and the issue was decided in favour of the assessee.

Final Conclusion: The assessment additions treating the subscription receipts as taxable royalty or technical service fees could not be sustained, and the appeal succeeded.

Ratio Decidendi: Mere access to an online database on subscription, without transfer of copyright or rendition of technical services involving human intervention, does not constitute royalty or fees for technical services.

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