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2009 -TMI - 34061 - AUTHORITY FOR ADVANCE RULINGS
Nature of Service
FactSet provides to the subscriber a mere right to view the information or access to the database while online.
No transfer including licensing of any right in respect of copyright is involved here..
The right that a customer gets is a right to use copy-righted database and not copy-right in the database.
Clause (v) of Explanation 2 to Section 9(1)(vi) does not encompass the use of copyrighted material.
The data is available in public domain and it is presented in the form of statements/charts after analysis, indexing, description and appending notes for facilitating easy access.
These value additions are outside the public domain and the copyright in them is not transferred or licensed to the subscribers.
Observations and Decision of AAR
Authority of Advance Rulings has examined the various provisions and materials available related to this issue and found that:
- Subscription fees are not in the nature of Royalty.
- Subscription fees are not in the nature of know how.
The subscription fee is not taxable in India as royalty. It is liable to be taxed only as business income if at all it is found by the Department that an agency PE exists. At present, on the facts stated by the applicant, we must hold that PE is not in existence and therefore the income is not liable to be taxed in India.
The customers are not required to withhold the tax, until and unless the Department finds the existence of PE after due enquiry.
At present, there is no obligation to file the return in view of our finding that there is no royalty income and on the facts stated by the applicant, there is no PE
Ruling in the case of Dun & Bradstreet Espana, S.A. followed.
For full text of ruling visit:
Royalty: subscription fees for remote database access are not royalty or know how; taxable only if an agency PE exists. Subscription fees for remote access to an offshore database grant only a right to view/use copyrighted content online and are neither royalty nor payment for know how. Proprietary value additions remain with the provider and do not convert access fees into royalty. Such fees are taxable in India as business income only if an agency permanent establishment (PE) exists; on the stated facts no PE exists, so no withholding or return obligation arises. of Press 'Enter' after typing page number.
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