9911796707
TMI Blog2012 (12) TMI 419X X X X Extracts X X X X X X X X Extracts X X X X ..... urnal or a magazine of a foreign publisher which is similar to the facts of the case in hand where the assessee has also claimed that the payment is towards subscription to online fashion magazine. Since no specific finding has been given by CIT (A) on the point of transfer of right to use the copyright and the decision relied upon by the Commissioner of Income Tax(Appeals) has been reversed by the Hon'ble High Court; therefore, the impugned order of the Commissioner of Income Tax(Appeals) is not sustainable as the very basis of the same has been reversed. Accordingly, we remit the issue to the record of the Commissioner of Income Tax(Appeals) to decide the same afresh in the light of the decision of the Hon'ble Karnataka High Court in the case of Commissioner of Income-tax, (International Taxation) Versus Wipro Ltd. [2011 (10) TMI 473 - KARNATAKA HIGH COURT] as well as the other decisions/rulings available on the point - appeal filed by revenue is allowed for statistical purpose. - IT Appeal No. 4432 (Mum.) of 2005 - - - Dated:- 9-11-2012 - P.M. JAGTAP AND VIJAY PAL RAO, JJ. Ms. Neeraja Pradhan for the Appellant. Nitesh Joshi for the Respondent. ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t payable to the foreign company is nothing but use of information concerning industrial, commercial experience falling within the definition of the term 'royalties' as defined in Article 13(3) of the Indo UK DTAA of which tax is required to be deducted at source. 3.3 The ADIT has further observed that as per the clause (iv) of explanation 2 to sec. 9(1)(vi) of the Act, the term 'royalty' means consideration for imparting any information concerning technical, industrial, commercial or scientific knowledge, experience or skill. Thus, the ADIT was also of the view that the payment for imparting of information concerning commercial knowledge or experience or skill is royalty and is income deemed to accrue or arise in India subjected to deduction of tax at source. Accordingly, the ADIT has directed the assessee to deduct the tax at source @ 15% plus 2% educational cess on the amount of UK Pounds 17,000. 4. The assessee challenged the said order before the CITA) and mainly contended that the payment being subscription fees is not in the nature of royalty; but is business income in the hands of WGSN and as per article 7, the business income of non-resident is not taxable in India unl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Network (P.) Ltd, In re [2007] 289 ITR 355 and submitted that an identical issue has been decided by the AAR wherein the subscription fee for concurrent access, fee for additional access and helpdesk charges paid by the cargo in India for use of portal developed by the non-resident and hosted on his server in Singapore, the AAR has held that portal and server together constitute integrated commercial-cum-scientific equipment and for obtaining internet access to airlines the use of portal without server is unthinkable. It was observed that the factual position in the site access was that a cargo booking agent/subscriber depending on his business needs, can use the portal at will on the server platform of the assessee at any time according to his needs for processing his request for booking cargo with various airlines and obtaining benefits of other sophisticated services offered by portal. The AAR has considered the meaning of terms 'royalties' as used in article 12(3) of Indo-Singapore treaty and held that the payment made for concurrent access to utilise the sophisticated services offered by portal would be covered by expression 'royalties' as used in article 12 of the DTAA. 5. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plated in clause (a) of para 3 of the article 13 of Indo UK treaty, the assessee has referred OECD commentary on royalty under DTAA and submitted that the consideration for information concerning industrial, commercial or scientific experience alludes to the concept of know-how; therefore, the information concerning industrial, commercial or scientific experience as mentioned in the DTAA should be equivalent to concept of know-how. The know-how is all the un-divulged technical information whether capable of being patented or not, that is necessary for the industrial reproduction of a product or process; therefore, the same conditions are to be applied in case of information concerning industrial, commercial or scientific experience. 5.5 The ld AR has also referred the report of High Powered Committee on E-Commerce and submitted that the information provided by the provider is out of a vast collection of widely available data and not any copyrighted article. Simple data retrieval would amount to rendering of services and would be taxable as business income under article 7 of the India UK DTAA as per the report of the High Powered Committee of E Commerce. He has submitted that mere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A. (supra) is not applicable because in the said case, the information provided by the provider from the data base collected from the available information in the public domain whereas in the case of the assessee, the assessee has received technical knowledge and information with respect to the latest design of the garments. She has further submitted that the decision in the case of Hon'ble Madhya Pradesh High Court (supra) is also not applicable because in the said decision, no finding has been given by the Hon'ble High Court and the matter was remitted to the record of the Tribunal for deciding the factual aspect on the basis of the relevant record and material. 6. We have considered the rival submissions as well as the relevant material on record. The payment in question has been made by the assessee towards the subscription for access to the website of WGSN thereby having access to the information available at the said website. The Assessing Officer held that the assessee is permitted to keep the design, trade mark and not permissible to redistribute any of the contents accessible at the website; therefore, the assessee has no other right except the right to use the informati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner is granted online, would not make any difference in the reasoning assigned by us to hold that such right to access would amount to transfer of' right to use the copyright held by M/s. Gartner and the payment made by the respondent to M/s. Gartner in that behalf is for the licence to use the said data base maintained by M/s. Gartner and such payment is to be treated as royalty.' Therefore, following the detailed reasons assigned by us in ITA No. 2808/2005 and connected cases, we hold that the finding of the Tribunal that payment made by the respondent to M/s. Gartner, a non-resident Company would not amount to royalty is not justified and liable to be set aside and accordingly, we answer the substantial question of law in the negative in favour of the revenue and against the respondent and pass the following Order:" 6.4 As regards the contention of the ld AR of the assessee that the Hon'ble High Court has decided the issue by holding that the payment was made for transfer of right to use the copyright in the case of Wipro Ltd. (supra) whereas the authorities below have not held that in the case of the assessee the payment was for transfer of right to use of copyright and the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vity, use or disposition of the information concerning industrial, commercial or scientific experience in order to be construed as royalty within the meaning of Article 12 of the Double Taxation Avoidance Agreement (for short, 'the DTAA') between India and USA. In any case, the payment will not be covered by Section 9(l)(vi) as it would fall into the exception (b) under that Section and the payment is for the purposes of a business carried on outside India or for the purposes of making or earning any income from any source outside India." 6.6 It is clear that in the case of Wipro Ltd. (supra), the assessee has contended that the payment was made for subscription for a journal or a magazine of a foreign publisher which is similar to the facts of the case in hand where the assessee has also claimed that the payment is towards subscription to online fashion magazine. The Assessing Officer has held that the payment is towards royalty whereas the Commissioner of Income Tax(Appeals) has straightaway decided the issue by holding that the payment is not for transfer of right to use in the copyright as held by the Tribunal in the case of Wipro Ltd. (supra). 7. Since no specific finding ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
