The case deals with the taxability of receipts from Indian ...

Online databases/journals access receipts not taxable royalties or FIS - no PE, copyright not granted, 'make available' clause not satisfied.

Case Laws     Income Tax

August 23, 2024

The case deals with the taxability of receipts from Indian customers for providing access to online databases/journals or sale of hard copy journals. The key points are: the assessee did not have a Permanent Establishment (PE) in India. Providing access to online databases/journals does not amount to royalty as it merely grants access to copyrighted articles, not the copyright itself, as per Supreme Court decisions. The receipts do not constitute consideration for granting rights in the copyright under Explanation 2 to Section 9(1)(vi) of the Act, hence not taxable as royalty. The services also do not qualify as Fees for Included Services (FIS) as they do not satisfy the 'make available' clause under Article 12 of the Double Taxation Avoidance Agreement (DTAA). Consequently, the receipts from Indian customers for offshore sales of books/journals or providing access to online journals/online library are not taxable as royalties or FIS under the Act or the Treaty. The assessee's appeal was allowed.

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