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2021 (12) TMI 647 - AT - Income TaxRoyalty income - appellant company appointed Dow Jones Consulting India Pvt Ltd [DJCIPL] on a principal to principal basis for distributing its products in the Indian market - AO was of the firm belief that the receipts from DJCIPL should be taxed in India as ‘Royalty Income” under the provisions of the Act as well as India-USA DTA - HELD THAT:- 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 case of Union of India Vs. Azadi Bachao Andalon [2003 (10) TMI 5 - SUPREME COURT]. Accordingly, we will consider the beneficial provisions of the tax treaty to see whether the contention of the assessee that the alleged payment from DJCIPL is not royalty income. The payments made for acquiring right to use product itself, without allowing any right to use the copy right in the product are not covered with the scope of ‘Royalty’ which may get covered under the term under Royalty as per the Act. The facts of the case in hand show that there is no transfer of legal title in the copyrighted article as the same rests with the assessee. All rights, title and interest in the licensed software which is being claimed to be copyrighted article are the exclusive property of the assessee. DJCIPL has no authority to reproduce the date in any material form to make any translation in the date or to make adaptation in the data. The end user cannot be said to have acquired a copy right or right to use the copy right in data. A perusal of the agreement with DJCIPL shows that DJCIPL does not acquire any right in relation to the products. In our considered view, in determining whether or not a payment is for use of copyright, it is important to distinguish between ‘a payment for right to use the copy right in a program’ and ‘right to use the program itself’. The revenue derived by the assessee from granting limited access to its data base is akin to sale of book, wherein purchaser does not acquire any right to exploit the underlying copyright. In the case of a book, the publisher of the book grants the purchaser certain rights to use the content of the book, which is copyrighted. The purchaser of the book does not acquire the right to exploit the underlying copyright. When the purchaser reads the book, he only enjoys the contents. Similarly, the user of the database does not receive the right to exploit the copyright in the database he only enjoys the product in the normal course of his business. Appellant is only granting access to its database to DJCIPL. In our considered opinion, the payments received cannot be said to be ‘Royalty’ in nature. 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. - Decided in favour of assessee.
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