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TMI Blog2023 (10) TMI 765X X X X Extracts X X X X X X X X Extracts X X X X ..... - ITAT MUMBAI] held that the purchase price received by the assessee from the distributor in India for granting access to its database does not amount to Royalty under the India-UK DTAA. Tribunal had referred and relied upon the decision in the group company of Dow Jones Consulting India Pvt. Ltd. [ 2021 (12) TMI 647 - ITAT DELHI] wherein it has been held that the purchase price received by the assessee from the distributor in India for granting access to its database does not amount to royalty under the India-USA DTAA. In the said case, the distributor in India was the same as that of the assessee (i.e., DJCIPL) and the terms of the distribution agreement between Dow Jones Company Inc. and DJCIPL were also similar in essence to the Factiva Distribution Agreement between the assessee and DJCIPL. Thus following the earlier year precedence, we hold that purchase price of Factiva products distributed by DJCIPL is not taxable as royalty under India UK DTAA in the hands of the assessee. Whether DJCIPL constituted agency PE? - AO has not made any addition in respect of PE as alleged by him and has restricted the addition by characterizing the receipts as royalty only. Therefore, we are n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07/08/2014, wherein assessee had granted rights to distribute its various financial and related products in the Indian market to DJCIPL on a principal to principal basis and at arm's length price. During the relevant Assessment Year 2016-17, assessee has received an amount of Rs. 3,19,87,030/- from DJCIPL towards distribution of its products; and in A.Y. 2017-18 it has received Rs. 6,40,31,392/- It was also received some minor amount for direct sales on similar products to KPMG which works to the tune of Rs. 2,45,256/- in A.Y. 2016-17 and Rs. 2,54,796/- in A.Y.2017-18. In the return of income, the assessee claimed that the amount received towards distribution of its products by DJCIPL is not taxable in India in terms of Article 13 of India UK DTAA and also not under Article 7, because assessee did not have any PE in India in terms of Article 5. Accordingly, Nil income was shown in India. 6. The ld. AO in the draft assessment order held that payment made by DJCIPL to the assessee is taxable as 'Royalty' u/s. 9(1)(vi) of the Act read with Article 13 since the payment is for; (a) use of copyright in literary work b) use of information concerning commercial, scientific knowledge, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s subscribers to create charts which help in evaluating media coverage. e) Alerts: A subscriber may choose to get real-time or scheduled alerts in respect of any particular news topic. 10. This Tribunal in A.Y.2015-16, in ITA No. 6455/Mum/2018, vide order dated 31/05/2022, held that the purchase price received by the assessee from the distributor in India for granting access to its database does not amount to 'Royalty' under the India-UK DTAA. The relevant finding and the observation reads as under:- 16. From the discussion made in the preceding paras and following the decision rendered by the co-ordinate Bench of the Tribunal and Hon'ble High Court of Bombay, we are of the considered view that Article 13 of India-UK DTAA defined „royalty' only when a payment is made for the use or the right to use a copy right of literary, artistic or scientific work. So the only those payments which allow payers to use/acquire a right to use a copy right in literary, artistic or scientific work are commissioned under the definition of royalty. In the instant case the assessee used to collect the information available in the public domains viz. newspaper and news wires from all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 9(1)(vi) of the Act read with Article 1313) of India- UK DTAA and as such ordered to be deleted the same." 11. The Tribunal had referred and relied upon the decision in the group company of Dow Jones Consulting India Pvt. Ltd. vs. ACIT of Delhi ITAT Bench reported in 135 taxmann.com 270 wherein it has been held that the purchase price received by the assessee from the distributor in India for granting access to its database does not amount to 'royalty under the India-USA DTAA. In the said case, the distributor in India was the same as that of the assessee (i.e., DJCIPL) and the terms of the distribution agreement between Dow Jones & Company Inc. and DJCIPL were also similar in essence to the Factiva Distribution Agreement between the assessee and DJCIPL. Relevant extract from the decision is reproduced hereunder:- "10. We have given thoughtful consideration to the orders of the authorities below. At the very outset, we have to state that basis the provisions of section 92 of the Act, the assessee is entitled to invoke the provisions of India-USA DTAA to the extent it is more beneficial. Our view is fortified by the decision of the Hon'ble Supreme Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he copyright in the data and accordingly, the payments made by DJCIPL for accessing the database would not qualify as payments for the use of copyright. 10.1.7 The Applicant submits that the payments made by DJCIPL is not for the transfer of all or any rights in respect of the database Under the agreement, DJCIPL does not acquire any right in relation to the products. 10.1.8 Thus in view of the above arguments, that shall be possible to conclude that the payment received by the Applicant cannot be treated as a consideration for the transfer of any 'copyright'. The transaction under consideration is tor the provision of accessing the database of the Applicant/financial products license, the same cannot he considered as 'royally' under article 12 of the India-US DTAA. 10.1.9 Furthermore, in determining whether or not a payment is for the use of copyright, it is important to distinguish between a payment for the right to use the copyright in a programme and the right to use the programme itself. We have outlined below our detailed submission on the distinction between copyright and the copyrighted article:" 12. A perusal of the above article shows that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The transaction under consideration is for provision of accessing database of the assessee. Hence the same cannot be considered as 'Royalty' under article 12 of the India-US DTAA. We, therefore, set aside the findings of the Assessing Officer and direct the Assessing Officer to delete the impugned addition. Ground No.1 is, accordingly, allowed." 13. Thus, following the earlier year precedence, we hold that purchase price of Factiva products distributed by DJCIPL is not taxable as 'royalty' under India UK DTAA in the hands of the assessee. 14. In so far as the issue whether DJCIPL constituted agency PE which ld. AO has just made a very passing remark has also been confirmed by the ld. DRP, this issue too has been decided in favour of the assessee by the Tribunal after observing as under:- "22. We have perused the findings returned by the AO as well as Lal DRP. AO in part 8.6 of its order has given a stray remarks that DICIPL could constitute an ogry PE of the assessee by returning following findings 8.6 Alternatively, without prejudice to the above, the assessee's argument that the assessee is having business income but the same is not taxable, since the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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