TaxTMI 
TaxTMI 
2022 (3) TMI 1019
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....n issue are common in all these appeals, they were heard together and are disposed of by this common order for the sake of convenience and brevity. 3. The common grievance in both the above captioned appeals relates to the taxation of the revenue from online database of text journals and books as royalty income under the provisions of Article 12 of the India USA Double Taxation Avoidance Agreement [DTAA]. 4. The representatives of both the sides were heard at length, the case records carefully perused. 5. Briefly stated, the facts of the case are that the appellant is an entity incorporated under the laws of USA. At the very outset, we have to state that basis the provisions of section 92 of the Act, the assessee is entitled to invoke th....
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.... literary, artistic or scientific work arc covered within the definition of royalty. Payments made for acquiring the right in use the product it sell, without allowing any right to use the copyright in the product, are not covered within the scope of royally winch may gel covered under the term 'Royalty' as per the Act. Further, unless the payments are made towards acquiring the right to use a copyright in a literary, artistic, or scientific work, definition of Royalty would not get attracted. Furthermore, in determining whether or not a payment is for the use of copyright, it is important to distinguish between a payment for the right to use the copyright in a programme and the right to use the programme itself. We have outlined ....
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....n the copy righted article as the same rests with the assessee. The user has no authority to reproduce the data in any material form to make any translation in the data or to make adaptation in the data. The end user cannot be said to have acquired a copyright or right to use the copyright in the data. In our considered view, for determining whether or not a payment is for use of copy right, it is important to distinguish between "a payment for right to use copy right in a program" and "right to use program itself". 11. In the case in hand, the revenue derived by the assessee from granting limited access to its data base is akin to sale of book, wherein purchaser does not acquire any right to exploit the underlying copyright. When the purc....
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....ax Act, and would not in any manner make the expression otiose, as has wrongly been held by the High Court of Karnataka." 15. The Hon'ble Supreme Court has settled the impugned quarrel in favour of the assessee and against the Revenue by concluding as under: 168. Given the definition of royalties contained in Article 12 of the DTAAs mentioned in paragraph 41 f this judgment, it is clear that there is no obligation on the persons mentioned in section 195 of the income-tax Act to deduct tax at source, as the distribution agreements/EULAs in the facts of these cases do not create any interest or right in such distributors/end-users, which would amount to the use of or right to use any copyright. The provisions contained in the Income-ta....