2023 (10) TMI 765

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....ues, • firstly, ld. AO and ld. DRP have erred in holding that amount received from Dow Jones Consulting India Pvt. Ltd. is taxable as 'royalty' u/s. 9(1)(vi) of the Income Tax Act r.w. Article 13 of India-UK DTAA; and • secondly, assessee did not have any permanent establishment in India under Article 5, therefore, the sum received in the nature of business profit, and hence nothing is taxable in India. • In A.Y. 2016-17 assessee has challenged the payment received of Rs. 3,22,32,290/- treated as 'Royalty' by the ld. AO and Rs. 6,42,86,188/- in A.Y. 2017-18. 4. Before us ld. Counsel submitted that this issue stands covered in favour of the assessee vide earlier order of the Tribunal in the case of the assessee decided on 31/05/2022 for the A.Y. 2015-16. 5. The facts in brief are that assessee company, i.e., Factiva Limited is incorporated in United Kingdom (UK) and is engaged in providing global news and business information services with content delivery tools and services through a suite of products and services under the name of 'Factiva'. To distribute these financial products in the territory of India, the assessee has entered into ....

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....t collaborates with the news publishers/other sources and collates such relevant publicly available news/information to create a systematic database of news articles/information with advanced search capabilities. • Once a subscriber of the Factiva product gets access to the database and puts a query in the search box, various news articles and other information in relation to the search term, as actually published, appear on the screen, providing due reference to the publication/source and the copyright holder of the content. It will be extremely important to note that the copyright in the news article/blog never does belong to the Appellant but always belongs to its publisher/author. • Along with providing access to the aforesaid database, certain ancillary tools/services are also provided in the portal, viz.: a) Factiva Reader: Helps in sharing the news/articles available on Factiva database with others Factiva subscribers. b) My Company Today: A general awareness newsletter compiled daily especially for a subscriber company to ensure that its staff gets the relevant news regarding the company, competitors and key issues affecting the r....

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....use or right to use any equipment as the subscriber and DJCIPL have no access, right or control of any manner whatsoever offer the data storage devises or the server maintained by the assessee to update its database. 19. In these circumstances, copy right in the news article/blog never belongs to the assessee but always belongs to the publisher or author. So the database prepared by the assessee does not have any copy right or intellectual copy right with the assessee and the customer only gets the right to search, view and display information. So in these circumstances findings returned by the Ld. DRP that Factiva product (access to database) is in the nature of royalty' under Article 13 of India-UK DTAA was sector specific specialized knowledge portal as the assessee has a dedicated team of 100 specialists to collate and update the data on daily basis and as such fall within the ambit of use of copy right as well as information concerning industrial scientific or commercial experience is not sustainable in the eyes of law. 20. Even otherwise this issue is covered in favour of the assessee in its group company case M/s. Dow Jones and Company India Pvt. Ltd. (....

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....e, derived by an enterprise of a Contracting State from the operation of ships or aircraft in International traffic. 10.1.5. Thus, article 12 of the Tax Treaty brings within the ambit of the definition of royalty, a payment made for the use of or the right to use a copyright of a literary, artistic or scientific work. Thus, only those payments that allow a payer to use/acquire a right to use a copyright in a literary, artistic or scientific work are 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. 10.1.6 In the current case, there is no transfer of legal title in the copyrighted article as the same rests with the Applicant. All rights, title and interest in the licensed software, which is being claimed to be copyrighted article, are the exclusive property of the....

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....no authority to reproduce the date in any material form to make any translation in the date or to make adaptation in the data. 14. We further find that the end user cannot be said to have acquired a copy right or right to use the copy right in data. A perusal of the agreement with DJCIPL shows that DJCIPL does not acquire any right in relation to the products. In our considered view, in determining whether or not a payment is for use of copyright, it is important to distinguish between 'a payment for right to use the copy right in a program' and 'right to use the program itself 15. 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. In the case of a book, the publisher of the book grants the purchaser certain rights to use the content of the book, which is copyrighted. The purchaser of the book does not acquire the right to exploit the underlying copyright. When the purchaser reads the book, he only enjoys the contents. Similarly, the user of the database does not receive the right to exploit the ....