Database subscription fees are not royalty where no copyright rights are transferred; TDS credit requires verification before allowance.

Subscription fees for access to a standardised, non-exclusive pharmaceutical market-research database compiled from publicly sourced data were not royalty under section 9(1)(vi) or Article 12(3) of the India-Switzerland Tax Treaty, because no copyright or comparable right was transferred. The analysis applied the principle of consistency by following earlier orders in the same assessee's case on identical facts. A short grant of TDS credit required factual verification before allowance, so the credit was directed to be granted after due verification by the Assessing Officer.

---

---

Issues: (i) Whether subscription fees received for access to online pharmaceutical market-research database reports were taxable as royalty under section 9(1)(vi) of the Income-tax Act, 1961 and Article 12(3) of the India-Switzerland Tax Treaty; (ii) whether short grant of TDS credit required verification and consequential allowance.

Issue (i): Whether subscription fees received for access to online pharmaceutical market-research database reports were taxable as royalty under section 9(1)(vi) of the Income-tax Act, 1961 and Article 12(3) of the India-Switzerland Tax Treaty.

Analysis: The subscription receipts arose from access to standardised statistical and market-research reports compiled from publicly sourced data and supplied on a non-exclusive basis. The issue was covered by earlier orders in the assessee's own case on identical facts. Applying the principle of consistency and following the settled view that such access does not amount to use of, or right to use, copyright or other royalty-bearing rights, the receipts could not be characterised as royalty under the treaty or the Act.

Conclusion: The issue was decided in favour of the assessee; the subscription income was held not taxable as royalty.

Issue (ii): Whether short grant of TDS credit required verification and consequential allowance.

Analysis: The assessee had sought credit for TDS already deducted and had also moved rectification proceedings. The credit claim required factual verification by the assessing officer before allowance.

Conclusion: The issue was decided in favour of the assessee to the extent that the Assessing Officer was directed to grant TDS credit after due verification.

Final Conclusion: The appeal was disposed of by granting relief on the royalty issue and by directing verification and grant of TDS credit, while the remaining grounds did not warrant separate adjudication.

Ratio Decidendi: Subscription income for access to a standard, non-exclusive, publicly sourced database is not royalty where no copyright or comparable rights are transferred and the issue is covered by binding precedent in the assessee's own case.

---