TaxTMI 
TaxTMI 
TaxTMI 
2025 (12) TMI 1696
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..... 3359/Mum/2023 for AY 2020-21 as lead case. 3. The brief facts as culled out from the proceedings before the authorities below are that the assessee is a company incorporated under the laws of Switzerland and has its entire management and control in Switzerland. The Assessee is engaged in the business of providing market research reports on pharmaceutical sector to it‟s customers across the globe at a predetermined subscription price. The Company mainly collects process and utilizes the data and information, particularly in the fields of medicine and pharmaceuticals for the delivery of reports through online IQVIA Knowledge link. The assessee company filed its return of income for A.Y 2020-21 on 13.02.2021 declaring total income of Rs. 58,87,36,450/-. The case was selected for complete scrutiny under CASS and notice u/s. 143(2) of the Act dated 29.06.2021 was issued and duly served on the assessee. Thereafter notices u/s 142(1) of the Act dated 27.12.2021 was issued. In reply to the said notice, the assessee has claimed exemption from taxation for its income earned under the head Subscription fees, Commission and consultancy as per Art.7 r.w.s Art. 5 of India - Swiss DTAA....
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....er Article 12(3) of the Tax Treaty on the basis that it is consideration for the transfer of a right to use any copyright as well as for imparting information concerning industrial, commercial or scientific knowledge, experience or skill. However, the Hon'ble ITAT vide its order dated 13 July 2020 / 11 May 2022 has deleted the impugned treatment of Subscription Income as Royalty for AY 2013-14, AY 2014-15, AY 2015-16 and AY 2016-17. It was further stated that the order of the appeal for AY 2017-18, 2018-19 and 2019-20 was awaited from the Hon'ble ITAT. It was therefore stated that subscription income is that taxable as Royalty Income because the case is covered by the order of assessee's own earlier cases as mentioned above wherein the Hon'ble Tribunal has deleted the impugned treatment of Subscription Income as Royalty. 5. Further, it is stated that the subscription payments are not towards transfer or use or right to use any copyright; the subscription income is not towards imparting any information. It was therefore submitted that the subscription income of Rs. 37,51,81,193/- received by the company from the Indian Customers is not towards transfer of or use or right to use a....
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.... of the DRP are not appealable by the Department, the objections of the assessee are dismissed and AO was directed to give effect to the aforesaid directions in terms of the provisions of sub-section 144C(13) of the Act. Penalty proceedings were also initiated separately. 7. Aggrieved by the impugned order, assessee preferred appeal before us and has raised the following grounds of appeal:- "Ground No. 1 - Non-taxable business income of Rs. 37,51,81,193 /- in the nature of Subscription Fees for standard online market research database on pharmaceutical sector taxed as Royalty under Section 9(1)(vi) of the Income-tax Act, 1961 ('the Act') and under Article 12(3) of the India- Switzerland Tax Treaty ('Tax Treaty') 1. On the facts and in the circumstances of the case and in law, the Ld. Assessing Officer (AO) / Dispute Resolution Panel (DRP) erred in concluding that the Subscription Income received by the Appellant for providing access to its online database of statistically compiled pharmaceutical data collected from public domain ("IQVIA Reports") is in the nature of 'Royalty as defined under section 9(1)(vi) of the Act as well as under Article 12(3)....
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....tances of the case and in law, the Ld. AO has erred in computing tax on the Subscription Fee income at 10.92 percent after levying surcharge and education cess as against the tax rate of 10 percent provided under the Tax Treaty without levying surcharge and education cess. 2. The Appellant has also filed a rectification application with the AO for the above mistake apparent from the record. 3. In view of the above, the AO should be directed to re-compute the tax on assessed income correctly after rectifying the above error apparent from the record and the excess consequential tax demand be deleted. Ground No. 4 - Levy of Interest under Section 234A of the Act of Rs. 4,62,147 1. On the facts and circumstances of the case and in law, the levy of interest under Section 234A of the Act is consequential in nature and should be deleted or reduced once the relief as sought under Ground no. 1, 2 and 3 is allowed to the Appellant. Ground No. 5 - Levy of Interest under Section 234B of the Act of Rs. 61,61,960 1. On the facts and circumstances of the cacase and in law, the levy of interest under Section 234B of the Act is consequential in ....
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.... findings rendered by the Jurisdictional ITAT in ITA No. 667/Mum/2022 (supra) in assessee's own case. The relevant portion of the findings rendered by the Coordinate Bench of ITAT is extracted below:- "2. The main issue arising in the present appeal is with regard to the taxability of subscription income received by the assessee as royalty u/s 9(1)(vi) and under Article 12(13) of the India-Switzerland Tax Treaty. The fact in brief is that assessee is a company incorporated under laws of Switzerland and has its entire management and control in Switzerland. The assessee is engaged in the business of providing market research report of pharmaceuticals sector to its clients. For this purpose, Iqvia AG (foreign company) the assessee collects relevant data through various sources/forms mainly from doctors/stockist/dealers which is compiled in statistical and strategic manner in its reports. The assessee company has filed its return of income for assessment year 2019-20 on 29.11.2019. The case was selected for scrutiny assessment under CASS and notice u/s 143(2) of the Act was issued on 22.09.2019. During the course of assessment the assessing officer noticed that assess....
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....es affecting the pharmaceutical and healthcare industries in a jurisdiction The IQVIA Reports are akin to a magazine that provide latest information and developments and it relates to database, information etc. relevant to the Pharmaceutical industry. Further, IQIVA Reports are standard data reports of the Module selected by Customers. 1.6 For the purpose of its database and IQVIA Reports, the Company collects relevant data through various forms mainly from doctors, stockiest, dealers and other sources The Company then merely compiles/extrapolates the data to provide statistical information to its Customers in the form of IQVIA Reports. 1.7 The Company grants non-exclusive and non-transferable license to use the IQVIA Reports provided to the Customers and thereby it restricts the use of information by the Customer for its own benefit, back-up, etc. 1.8 During the year under consideration, the Company has delivered to its Indian Customer, majorly the following types of IQVIA Reports: a) World Review Molecule. The said reports provides access to the database to the Indian Customers, of all details / characteristics of the selected molecule. Further....
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.... and held that subscription income received by the company is in the nature of royalty u/s 9(1)(vi) of the Act as well as under Article 12(3) Tax Treaty. 3. The assessee has filed detailed objection against the addition made by the assessing officer before the DRP. The DRP issued directions vide their order u/s 144C(5) of the Act on 24.01.2022 stating that for the assessment year 2013-14 & 2014-15 identical issue in the assessee's own case has been decided in favour of the assessee by the ITAT, Mumbai. However, to just keep the issue alive and to protect the interest of revenue rejected the objection filed by the assessee. 4. In conformity with the directions issued by the DRP the assessing officer has passed final assessment order u/s 143(3) r.w.s 144C(13) of the Act on 15.02.2022 and assessed the aforesaid subscription fees as royalty u/s 9(1)(vi) of the Act as well as Article 12(3) of the Act Tax Treaty. 5. During the course of appellate proceedings before us at the outset the ld. Counsel submitted that similar issue on identical facts has been adjudicated in favour of the assessee by the coordinate bench of the ITAT in assessee's own case for assessme....
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....a molecule, providing insight into the connected issues relating to information and developments. The licence access so granted is a non-exclusive and nontransferable right. It is consideration received, as allowing this non-exclusive, non-transferable access to the database and IMS reports which is subject matter of dispute before us. The authorities below have held that in the light of Hon'ble Karnataka High Court's judgment in the case of CIT Vs Wipro Ltd [(2011) 203 Taxman 621 (Kar)] and other judgments by the same Hon'ble High Court, which have been followed by a coordinate bench of this Tribunal as well, these receipts are required to be taxed as royalty under section 9(l)(vi) as also under article 12(3) of the Indo Swiss DTAA. The assessee is aggrieved and is in further appeal before us. 4. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 5. We find that Hon'ble jurisdictional High Court, in the case of DIT Vs Dun and Breadstreet Information Services India Pvt Ltd[(2012) 20 taxmann.695 (Mum)] has, while approving and concurring with the approa....
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....cal or consultancy services. We have already mentioned above that a BIR is a standardized product of D&B, it provides factual information on the existence, operation, financial condition, management and experience line of business, facility and location of a company; it also provides special events like any suit, lien, judgment or previous or pending bankruptcy. Further, banking relationship and accountants, information like whether it is a patent company or authority concerned, has any branches etc. It also gives a rating of the company. The informations that are provided in a BIR are said to be publicly available; they are collected and complied by D&B associates. A BIR is accessible by any subscriber on payment of requisite price with regular internet access for which no particular software or hardware is required. The applicant states that access to data base of the applicant is available to public at large at a price as in case of buying a book and it is not a pre-requisite, that BIR must be downloaded by DBIS only and in fact some clients, such as Expert credit guarantee corporation, in fact, access the server themselves to download BIR. The applicant does not have any server....
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....ch now stand approved by Hon'ble jurisdictional High Court, are equally applicable in the context of Indo Swiss DTAA as well. It is only elementary that when the assessee is not taxable under the provisions of the respective DTAA, there is no occasion to examine the taxability under the Income Tax Act 1961, since the provisions of the Income Tax Act 1961 apply only when these provisions are more favourable to the assessee vis-a-vis the provisions of the applicable DTAA. 8. When the above position was brought to the notice of the learned Departmental Representative, he simply placed his reliance on the stand of the authorities below. He could not, however, neither point out any legally distinguishable features between the case before Hon'ble jurisdictional High Court visa-vis this case, nor any other reasons for not following the binding precedent from Hon'ble jurisdictional High Court. Once our Hon'ble jurisdictional High Court has expressed a view, it cannot be open for us to be swayed by a contrary view expressed by any other Hon'ble High Court. No decision from Hon'ble jurisdictional High Court, contrary to the above decision of Hon'ble juris....