Cloud software subscription receipts are not royalty or technical fees without copyright transfer or make-available of know-how.

Subscription receipts for cloud-based CRM access were analysed as consideration for use of a hosted software platform, not as royalty, because there was no transfer of copyright or right to exploit the software as a copyrighted work. The distinction between a copyrighted article and copyright itself was applied, and mere online access for business use did not bring the receipts within the treaty royalty article. The fees for technical services argument also failed because no technical knowledge, skill, experience, know-how or process was made available to the customer, and the ancillary clause could not apply once the principal test was not met. The treaty definition prevailed over section 9(1)(vi), so the receipts were not taxable in India on the facts found.

---

---

Issues: Whether subscription receipts for cloud-based CRM software access were taxable as royalty or fees for technical services under the Income-tax Act, 1961 and the India-Singapore Double Taxation Avoidance Agreement.

Analysis: The receipt was held to be consideration for granting access to a software platform hosted abroad, without any transfer of copyright or right to exploit the software as a copyrighted work. The distinction between a copyrighted article and the copyright itself was applied, and the receipts were not brought within the royalty article merely because the customer could access and use the application for its own business. The attempt to characterise the receipts as fees for technical services also failed because no technical knowledge, skill, experience, know-how or process was made available to the customer, and the ancillary or subsidiary clauses could not operate once the principal requirements of the article were unmet. The domestic deeming fiction in section 9(1)(vi) could not expand the treaty definition where the treaty was more beneficial.

Conclusion: The receipts were not royalty and did not amount to fees for technical services. The assessment could not be sustained against the assessee.

Final Conclusion: The appellate challenge was rejected and the Tribunal's view was upheld, leaving the software subscription income outside taxability in India on the facts found.

Ratio Decidendi: Mere online access to software or a cloud platform, without transfer of copyright or making available of technical knowledge or rights in the software, does not constitute royalty or technical fees under the treaty.

---