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TMI Blog2017 (5) TMI 1520X X X X Extracts X X X X X X X X Extracts X X X X ..... DIT vs. Infrasoft (2013 (11) TMI 1382 - DELHI HIGH COURT ), wherein it has been held that in a case where assessee gets right to access “copyrighted material”, there is no dispute regarding the same to fall out of definition of term “Royalty”, under India Singapore DTAA. In this case, as assessee has only received access of copyrighted material, there is no dispute about payment falling out of definition of royalty. During course of hearing before us Ld. DR could not demonstrate as to how there was use of copyright and therefore, attempt to bring payments made under explanation 2 clause (iv) to section 9 (1) (vi) of the Act cannot be accepted. - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... of computer software (including data processing), rendering support services and acting as a back-office to its parent entity being Mc Kinsey and Co. Inc. It has been submitted by assessee that for the purpose of its business, assessee is required to access certain database, maintained by Thomson which provides general information on share price, market, commodity price, currency exchange rates etc. It was submitted that these are publicly available database which can be accessed by anyone, who is willing to subscribe to it. Ld. ITO observed that Thompson is a company incorporated in Singapore and is tax resident of Singapore, entitled to benefits under India Singapore Double Taxation Avoidance Agreement (DTAA). It was submitted that Thompson, neither renders any services in India nor has any place of business/office/personnel in India. 4. Before Ld. ITO, it was submitted that assessee entered into a master agreement no. 105337 with Thomson, wherein certain payments were to be made by assessee for accessing the database of Thomson. Certain clauses of agreements, for the sake of convenience are reproduced here with: "3. Use of the Service, Data and Software Product • Clien ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Data contained in such reports or presentations. 4. Leased Equipment The Leased Equipment rented to Client, is, and will remain the property of Thomson. Client will not part with possession or control of the Leased Equipment for purposes of installation, removal, maintenance, or repair during reasonable business hours. Client agrees not to move the Leased Equipment without giving Thomson no less than ten (10} days prior written notice. Client agrees not to use any apparatus or device, directly indirectly, with the Leased Equipment supplied without the prior written consent of Thomson. Client shall maintain the Leased Equipment in good working order subject to ordinary wear and tear and locate the Leased Equipment in an appropriate environment. Client agrees to insure the Leased Equipment in a sum equal to its replacement value under a commercial multi-peril policy or its equivalent. Client further agrees to furnish Thomson with a certificate of insurance evidencing such coverage. 5. Proprietary Rights Client agrees that the Services and the Software Product consist of factual information gathered, selected and arranged by Thomson, Third Party Data Suppliers, or Third Part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for its own benefit, any such Confidential information, both during the Service Term of this Agreement and thereafter. 4.3 As referred in the agreement, the service order is made between McKinsey omson and this reads as below: As per the Master agreement between Assessee and Thomsan Assis Pte. Ltd. the details regarding service received and value of such service are as under: NO OF REGIST ERED USERS UNIT PRICE DESCRIPTION (PACKAGE COMPONENTS ARE ATTACHED) DELIVERY PLATFORM PRODUCTS FEES (INDICATE ANNUAL OR MONTHLY] EQUIPMENT FEES THIRD PARTY FEE TOTAL CONTRAC T VALUE Please see below Data stream Advance Global Equiiies & Economics Internet Annual $ 112.200 NA t/S/E/S Global Current Summary ana Global History Summary Data stream Annual $ 20,000 NA 1/8/E/S International Globa- Aggregates and S&P 500 Aggregates Datastream Annual $ 18.000 Current & History Total Value USD $ 150,200 5. Subsequent to agreement for access of databases following invoices were raised upon assessee by Thomson on 04.01.2007, the details of which are as under: 6. Assessee contended before Ld. ITO that the above payments are not of nature of royalty as per section 9(1)(vi) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He further submitted that there is no transfer of any right in respect of copyrights by Thomson and it is a mere simple case of transfer of copyrighted article. Ld. Counsel submitted that in order to qualify payments made to Thomson as royalty, it is necessary to establish that there is a transfer of all or any rights (including the granting of any license) in respect of copyright of literary, artistic or scientific work. He submitted that in order to treat consideration paid by assessee as royalty, it is to be established that assessee by making such payment claims all or any of copyrights of such literary work. Ld. Counsel submitted that decision of Hon'ble Karnataka High Court in the case of CIT vs. Samsung Electronics Co. Ltd., reported in (2012) 345 ITR 494 has been distinguished by Hon'ble Delhi High Court in case of DIT vs. Infrasoft Ltd., reported in (2014) 264 CTR 329. He placed specific reference to para 98 of the decision of Hon'ble Delhi High Court in the case of CIT vs. Infrasot Ltd., (supra) which reads as under: "98. We are not in agreement with the decision of the Karnataka High Court in the case of Samsung Electronics Co. Ltd., (supra) that right to make a copy of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence for commercial exploitation of the Copyright with regard to the database maintained by Thomson. Assessee had claimed a limited right to use the information which is no doubt the "copyrighted information" solely belonging to Thomson under master agreement. Assessee is also not required to pay any third-party fee which is evident on reading of master agreement. 15. The clauses in agreement are non-exclusive, non transferable and information available on database has to be used in accordance with the agreement only. We agree with the agreement advanced by Ld. Counsel that in order to qualify payment made to Thomson as royalty payment it is necessary to establish that there is a transfer of all or any rights in respect of copyright of literary work. It is observed that assessee is not allowed to exploit the database commercially under the agreement. 16. We find that treaty provisions between India and Singapore unambiguously require the use of copyright to be taxed in the source country. In the present case, the payment has been made by assessee for use of "copyrighted material" rather than for the use of copyright. The distinction between "copyright" and "copyright article" has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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