Cloud software subscription receipts are not royalty or technical fees absent transfer of copyright or technical know-how.

Mere subscription-based access to a cloud software application does not amount to royalty or fee for technical services where no copyright, equipment use, or technical knowledge enabling the customer to apply the technology is transferred. On materially identical facts, the Tribunal followed its earlier decisions and the Jurisdictional High Court's ruling, holding that the treaty provisions on royalty and consultancy or technical services were not attracted. The CRM service receipts were therefore not taxable in India under the Income-tax Act or the applicable treaty.

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Issues: Whether receipts from CRM services were taxable in India as royalty or fee for technical services under the Income-tax Act and the applicable treaty.

Analysis: The receipts from CRM services had already been examined in the assessee's earlier assessment years on materially identical facts. The Tribunal and the Jurisdictional High Court had held that the customer merely obtained access to the application and that no copyright, equipment use, or technical knowledge enabling application of the technology was transferred. The treaty provisions dealing with royalty and consultancy or technical services were therefore not attracted on the facts found. Following those binding decisions and the parity of facts for the years under appeal, the same treatment was warranted for the impugned assessment years.

Conclusion: The receipts from CRM services were not taxable in India as royalty or fee for technical services and the issue was decided in favour of the assessee.

Ratio Decidendi: Mere subscription-based access to a cloud software application, without transfer of copyright or provision of technical knowledge enabling the subscriber to apply the technology, does not constitute royalty or fee for technical services.

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