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2022 (6) TMI 342 - AT - Income TaxIncome accrued in India - Royalty' u/s 9(1)(vi) read with Article 13 of DTAA entered into between India and UK - Agency PE of the Appellant - HELD 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 over the world including global business and trade publications, targeted industry and regional publications, key websites and business blogs, market data and company professionals by collaborating with the news publishers and other sources and collates such relevant publically available news/information, then create a systematic database of news, article/information with advanced search capabilities and then subscriber of Factiva product gets access to the database, business puts a query in the search box, various news articles and other information in relation to search term, as actual public appears on the screen. Payment received by the assessee is not for any information qua industrial scientific or commercial experience rather it is only for preparing a database on the basis of information already available in the public domain in the form of news, articles etc. Moreover, payment received by the assessee is merely for the use of database and not for the use or right to use any equipment as the subscriber and DJCIPL have no access, right or control of any manner whatsoever offer the data storage devises or the server maintained by the assessee to update its database. In these circumstances, copy right in the news article/blog never belongs to the assessee but always belongs to the publisher or author. So the database prepared by the assessee does not have any copy right or intellectual copy right with the assessee and the customer only gets the right to search, view and display information. So in these circumstances findings returned by the Ld. DRP that Factiva product (access to database) is in the nature of ‘royalty’ under Article 13 of India-UK DTAA was sector specific specialized knowledge portal as the assessee has a dedicated team of 100 specialists to collate and update the data on daily basis and as such fall within the ambit of use of copy right as well as information concerning industrial scientific or commercial experience is not sustainable in the eyes of law. This issue is covered in favour of the assessee in its group company case M/s. Dow Jones and Company India Pvt. Ltd. [2021 (12) TMI 647 - ITAT DELHI]. So the question framed is answered in the negative and as such the payment received by the assessee is not a ‘royalty’ under Article 13 of India-UK DTAA. So we hereby set aside the addition made by the AO under section 9(1)(vi) of the Act read with Article 13(3) of India-UK DTAA and as such ordered to be deleted the same. Agency PE - Since assessee has vehemently opposed the observation made by the AO that DJCIPL is an agency PE of the assessee. Moreover there is not an iota of material on record to prove this fact. So the payment received by the assessee is not taxable in India as the Revenue has failed to prove that the assessee has a PE in India in terms of Article 5 of India-UK DTAA. - Decided in favour of assessee.
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