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2023 (4) TMI 273 - AT - Income TaxRoyalty - Income taxable in India or not - access to online database of journals and books - PE in India - addition u/s 9(1)(vi) of the Income-tax Act, 1961 and Article 12 of India – United States of America (USA) DTAA - assessee is a non-resident corporate entity incorporated in USA - HELD THAT:- Assessee has not transferred right to use of any industrial, commercial, or scientific equipment as the subscriber are only granted access to online database. Various law journals have created online database by collating judgments/orders of courts, tribunals etc. and access is allowed to subscribers upon payment of subscription. However, by allowing such access there is no transfer of right to use of any copyright. Terms of the agreement, as discussed earlier, restricts the subscribers from exploiting or modifying the contents. Thus, it is very much clear, only limited right of access to the database was granted to customers on subscription basis. Therefore, in our view, the amount received will not fall within the ambit of royalty as defined under Article 12(3) of the tax treaty. Thus we hold that the amount received by the assessee, being not in the nature of royalty under Article 12(3) of the treaty, cannot be brought to tax in India in absence of a Permanent Establishment. Accordingly, we direct the AO to delete the addition. Appeal of assessee allowed.
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