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2022 (3) TMI 1019 - AT - Income TaxIncome accrued In India - Royalty receipts - taxation of the revenue from online database of text journals and books as royalty income under the provisions of Article 12 of the India USA Double Taxation Avoidance Agreement [DTAA] - beneficial provisions of the tax treaty to see whether the contention of the assessee that the alleged revenue is not royalty income - HELD THAT:- On an understanding of the entire factual matrix of the business of the assessee shows that there is no transfer of legal title in the copy righted article as the same rests with the assessee. The user has no authority to reproduce the data in any material form to make any translation in the data or to make adaptation in the data. The end user cannot be said to have acquired a copyright or right to use the copyright in the data. In our considered view, for determining whether or not a payment is for use of copy right, it is important to distinguish between “a payment for right to use copy right in a program” and “right to use program itself”. In the case in hand, 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. When the purchaser reads the book, he only enjoys the content. Similarly, user of the data base does not receive the right to exploit the copyright in the database, he only enjoys the product in the normal course of his business. Facts on record show that the appellant is granting access to its data base. Transaction under consideration is for provision of accessing data base of the assessee. Hence the same cannot be considered as royalty under Article 12 of the India USA - DTAA. While taxing the revenue as royalty, the Assessing Officer has relied upon the decision of the AAR in the case of Skillsoft Ireland Limited wherein the AAR has followed the decision of the Hon'ble Karnataka High Court in the case of Synopsis International Ltd. [2013 (2) TMI 448 - KARNATAKA HIGH COURT] - we set aside the findings of the ld. CIT(A) and direct the Assessing Officer to delete the impugned addition. Appeal of assessee allowed.
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