TaxTMI 
TaxTMI 
TaxTMI 
2022 (4) TMI 327
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....he Income-tax Act, 1961 [hereinafter referred to as 'The Act'] r.w and/or under Article 12 of the India - Singapore DTAA and by treating such, the ld. CIT(A) erred in holding that the services rendered by the assessee are in the nature of imparting of information concerning commercial expediency. 4. Representatives of both the sides were heard at length. Case records carefully perused. In addition to oral submissions, both the parties furnished written submissions which have been duly considered. 5. Briefly stated, the facts of case are that the assessee is engaged in providing comprehensive Customer Relationship Management (CRM) services which enable customers and subscribers to systematically record, store and act upon business data, and to help businesses manage customer accounts, track sales, lead, evaluate marketing campaigns, and provide better post-sales service. 6. The assessee is a company incorporated in Singapore and is a tax resident of Singapore and is a leading provider of comprehensive Customer Relationship Management (CRM) services to its customers. Services rendered by the assessee help the client in generating reports and summaries of the data which is ....
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....guage to be conveyed through the software. These solutions, therefore, provide automation of the core process of a particular industry and definitely, are not simple computer programs. 11. According to the ld. DR, when the complex high level technology solutions are transferred for use to the customer, the customer gets to use the process embedded in the said software. The process so made available still remains the property of the person who had created it and the customer gets the right to use the process embedded in the software. 12. In so far as the consideration received for subscription service to data base and custom research is concerned, the ld. DR stated that the assessee has comprehensive data bases, which contains research themes gathered from different sources. The data base subscription service provides access to various customized reports and other data which is made available to subscribers via interactive website. 13. We have given thoughtful consideration to the contentions of the ld. DR and have duly considered the written submissions. In our understanding of the facts, the assessee provides web-based online access to its customer's data hosted on servers loca....
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....ly disclosed chemistry related scientific information or publishes research work submitted by scientists worldwide. Thus, this information is clearly not undivulged; rather, it is an information which is available in public domain, as is also evident from the factual position noted by the Assessing Officer himself in the assessment order. Further, chemistry and related scientific information accumulated by the assessee in the form of a database is the experience of various scientists, researchers and various other persons and not that of the assessee. Thus, what the assessee collates is experience of others and provides access thereto. The database does not provide any information arising from assessee's own previous experience or knowledge of the subject. The assessee's experience lies in the creation and maintaining the database, which cannot be labelled as industrial or commercial or scientific in any way in the context of the receipts in question. In fact, it is nobody's plea that such experience is shared by the assessee with the Indian customers. The Indian customers do not make payments for availing the knowledge of assessee's experience of creating/maintaini....
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.... farm is owned and operated by D&B US and it contains mirror servers of all the D&B associate companies. The modus operandi of the business of DBIS is that whenever an Indian customer places an order for a BIR in respect of a company situated in Spain, DBIS would access the master server of D&B US. Thereupon, the master server would identify DBIS and would allow access to connect to the mirror server of the applicant which is situated in US server farm. It was then DBIS would request the applicant for a BIR of the company for which the Indian customer has placed an order. On locating the required BIR, DBIS would download, print and deliver a copy thereof to the customer. DBIS is under an obligation not to take additional copies or reproduce the BIR in any manner or sell it to any customer other than Indian customer on whose requisition the BIR is ordered because the BIR is copyright protected with the copy right vested in the applicant who prepares the BIR. There is further obligation on the Indian customer to use the BIR for its own purpose, the copyright in the BIR would neither be licensed nor assigned to either the DBIS or the Indian customer ............ 7. It will be ..........
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....ink not." 20. In another case, the co-ordinate bench in the case of GECF Asia Ltd ITA NO. 8922 /(MUM.)/2010 48 Taxmann.com 148 has held as under: "10. From the above, it can be gathered that the royalty payment received as consideration for information concerning industrial, commercial, scientific experience alludes to the concept of knowhow. There is an element of imparting of knowhow to the other, so that the other person can use or has right to use such knowhow. In case of industrial, commercial and scientific experience, if services are being rendered simply as an advisory or consultancy, then it cannot be termed as "royalty", because the advisor or consultant is not imparting his skill or experience to other, but rendering his services from his own knowhow and experience. All that he imparts is a conclusion or solution that draws from his own experience. The eminent author Klaus Vogel in his book "Klaus Vogel On Double Tax Convention" has reiterated this view on difference between royalty and rendering of services in the following manner:- 'Imparting of experience: Whenever the term "royalties" relates to payments in respect of experience (knowhow) the condition for a....
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....tter of dispute after the direction of the DRP, hence, we are not expressing any opinion on FTS. Thus, ground no.1 and 2, are treated as partly allowed for statistical purposes." 21. In yet another case Kotak Mahendra Primus Ltd ITA No. 2714 & 2001/2011 SOT 578, the co-ordinate bench held as under: "16. We now come to the provisions of article 12(3)(c) of the India Australia tax treaty. It provides that where the payment is for "the supply of scientific, technical, industrial or commercial knowledge or information", the same shall be considered as 'royalty' for the purposes of article 12 of the treaty. By no stretch of logic, it could be said that the payment is made to the Australian company for the supply of any knowledge or information or any nature whatsoever. Learned Departmental Representative could not point out any legally sustainable reasons on the basis of which the payment can be said to be covered by article 12(3)(c). We have also carefully considered factual matrix of the case and are of the considered view that the payment in question cannot be said to be for the supply or any knowledge or information. The information is in fact furnished by the Indian company, the....
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....ut earlier in the order, are at variance with the conclusions arrived at in the said ruling. We have carefully perused the esteemed views of the Hon'ble Authority for Advance Ruling, and, with respect but without hesitation, we are not persuaded. 18. In view of the above discussions, in our considered view, the impugned payment cannot be held to be covered by the scope of expression 'royalty' under article 12(3) of the India Australia Double Taxation Avoidance Agreement. Since the Australian company admittedly does not have any permanent establishment (PE) in India, this payment cannot also be taxed as a business profit of the Australian company in India. It is so in view of the fact that article 7(1) of the applicable tax treaty specifically provides that, "The profits of the enterprises of one of the Contracting States shall only be taxable in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein". This leads us to the conclusion that the right of Indian tax jurisdiction does not extend to taxing the impugned payment of A$ 3,25,000 to the Australian company, i.e., FCAL, for specialized data process....