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2014 (7) TMI 899 - AT - Income TaxForeign exchange system services provided - Article 13 Indo-UK DTAA – Royalty under clause (iva) of Explanation 2 to 9(1)(vi) – Held that:- Assessee is facilitating its clients to use its system and application programming interface which is subscriber interface for use with the related services includding Autoquote service - assessee is also providing the equipments with pre-loaded software to its subscribers and network used for provision of the services - it is clear from the terms and conditions of the contract between the parties that it is subscriber who is using the information and system of the assessee for their commercial/business purposes - the portal having system of matching the request along with the computer and internal access to the clients constitute integrated commercial equipment which performs complex functions of processing the request, providing information and facilitates the transaction of purchase and sale of foreign exchange by matching the demand and supply - The platform of transacting the purchase and sale is commercial equipment allowed to be used by clients/subscribers for commercial purposes - The payments made by Indian clients/subscribers to the Assessee for use and right to use of such equipment and information for processing their request of purchase and sale of foreign exchange constitute royalty. By allowing the use of software and computer system to have access to the portal of the Assessee for finding relevant information and matching their request for purchase and sale of foreign exchange amount to imparting of information concerning technical, industrial, commercial or scientific equipment work and payment made in this respect would constitute royalty - the income received by the assessee from the Indian Banks is in the nature of royalty - once the receipt has been decided as royalty in nature then there is no need to go into the question of assessee having PE in India - the provision of para 6 of Article -13 cannot be invoked in case when the receipt is found as royalty in terms of Article - 13(3) of the DTAA and assessee has not admitted any PE in India – Decided against Assessee.
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