2021 (11) TMI 217

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.... receipts from Indian customers amounting to INR 102,66,92,087 are chargeable to tax as royalty in terms of Article 12(3) of India-US Double Tax Avoidance Agreement ("DTAA") and under section 9(1)(vi) of the Act. 2.1 That on the facts and in the circumstances of the case and in law, the Ld. AO/DRP have erred in holding that the subscription charges received under Chemical Abstract Service (CAS) division and Publications (PUBS) division would be chargeable to tax in India under India-US DTAA being received for use or right to use of copyright in artistic, literary or scientific work and/or for use of information concerning industrial, commercial or scientific experience and/or for use of industrial, commercial or scientific equipment. 2.2 That on the facts and circumstances of the case and in law, the Ld. AO/DRP have erred in holding that the subscription charges received under CAS and PUBS divisions would be chargeable to tax in India under India-US DTAA being received for use of ACS databases/software. 2.3 That on the facts and circumstances of the case and in law, the Ld. AO has erred in disregarding the recently pronounced decision of the Hon'ble Supreme Court in the c....

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.... are as under:- i) Chemical Abstracts Service (CAS) division: This division identifies, aggregates, and organizes publicly disclosed chemistry and related scientific information. It offers online, web-based and desktop access to databases of scientific content to its customers. Search and analysis tools help customers in locating chemistry-related substance information in the databases. ii) Publications (PUBS) division: This division reviews and publishes research work submitted by scientists worldwide. It is engaged in subscription sales of web-based and printed copies of research journals/e-journals in the subject of chemistry, to its subscribers. The assessee grants online/web-based access to e-journals, e-books, chapters, articles, proceedings etc. The customers of the assessee would generally include organizations and individuals interested in the field of chemistry such as educational institutes, research organizations, companies etc. The assessee has such customers in India as well and receives payments for provision of products/services from outside India to Indian customers. Accordingly, the assessee earned revenue of Rs. 62.48 Crores as fee for providing access by su....

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....ere as follows:- 11. With respect to the subscription fee for the CAS division being considered as Royalty for "use" of or "right to use" of a copyright, a reference to Copyright Act, 1957 is also relevant. A person can be said to have acquired a copyright or the right to use the copyright in a computer software or database (as described by the Assessing Officer), where he is authorized to do all or any of the acts as per the definition of the term "copyright" under Section 14 of the Copyright Act, 1957. However, mere access to that work or permission to use the work cannot imply that the payer is paying for use or right to use the copyright. In other words, when no copyright is acquired by the payer, question of using it or getting a right to use it does not arise. 12. In the present context, we may also examine the issue from another angle as follows. The transfer of a copyrighted right means that the recipient has a right to commercially exploit the database/software, e.g. reproduce, duplicate or sub-license the same; such payments may be classified as royalty, but factually speaking in the present no such rights in database or search tools (SciFinder or STN) are acquired by....

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....on for an annual fee/subscription charges. Such e-journals/e-books can be searched by a subscriber by using relevant keywords on PUBS website after logging in by using their log-in credentials. Customers are merely granted access to search and view the ejournals and obtain standardized reports/research articles available therein with no right to use the copyright in the e-journals/articles. The agreements (as filed in the Paper book at page 43 to 71) entered by the assessee with the customers provide that copyright in the e-books, e-journals etc., remain with the assessee and the customers do not have any right of ownership on the same. The access to e-journals etc. is given only for limited users and the same is restricted to specified authorized sites/users per customer through the IP address of customers. The web access journals can only be accessed by the customers/authorized users through a secure network as prescribed in the agreements. 16. On the other hand, the Ld. Departmental Representative for the Revenue has merely reiterated the stand of the lower authorities on the PUBS division similar to stand with respect to taxability of the CAS fee. 17. We have heard the riva....