Online database subscription fees are not royalty or technical services absent copyright transfer or make available of know-how.

Subscription fees for access to an online legal database were held not to be royalty, because the arrangement granted only use of the facility and did not transfer copyright or a right to use copyright. The receipts were also not fees for technical services, as no managerial, technical or consultancy service was rendered and the make available condition was not met, since no technical knowledge, skill, know-how or process was imparted for independent future use. In the absence of a permanent establishment in India, the income was treated as business profit and not taxable in India.

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Issues: Whether subscription fees received for access to an online legal database were taxable in India as royalty or fees for technical services, or whether they constituted business income taxable only if attributable to a permanent establishment in India.

Analysis: The access granted to subscribers was held to be only a facility to use the database and not a transfer of copyright or a right to use copyright. The receipt did not answer the description of royalty under the treaty, and the statutory definition of fees for technical services was also found inapplicable because no managerial, technical, or consultancy service was rendered. The arrangement did not satisfy the make available requirement under Article 12(4)(b), since no technical knowledge, skill, know-how, or process was imparted to the subscriber for independent future use. In the absence of a permanent establishment in India, the income was treated as business profit and not taxable in India.

Conclusion: The subscription receipts were not taxable as royalty or fees for technical services and could not be brought to tax in India in the absence of a permanent establishment.

Ratio Decidendi: Mere access to copyrighted content or a database, without transfer of copyright or imparting of technical knowledge under a make available clause, does not constitute royalty or fees for technical services under the treaty or the Income-tax Act.

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