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2020 (2) TMI 1482 - AAR - Income TaxCharacterization of income - receipt by the applicant from the Indian subscribers and customers for e-books/e-journals/e-articles -TDS u/s 195 - Whether taxable as 'Royalty' as per section 9(1)(vi) and article 12 of the Double Tax Avoidance Agreement (the DTAA) or as 'business income' under section 28 of the Act and article 7 of the DTAA between India and Netherlands - HELD THAT:- One has to first appreciate that it is scientific experience of the recipient of any consideration and not the scientific experiences contained in the goods or services transferred by payee. In the present case the applicant is compiling and collating books, articles or journals relating to science but the applicant are not transferring any scientific experience to the subscriber. The OECD commentary suggests that the work "scientific experience" is to be construed as non-copyrighted know how. It is also noticed that India does not seem to have any observation or reservation on above referred paras of OECD commentary. However, on positions on article 12 of the commentary India does not agree with the interpretation that information concerning industrial, commercial or scientific experience is confined only to previous experience. Assimilating the facts of the case with the views offered in "OECD commentary and India" position thereon we are of the view that there is no transfer of any know-how or previous or new experience to subscriber. Hence, the third limb of the definition thus does not apply to the applicant and the receipt by the applicant from the Indian subscribers and customers for e-books/e-journals/e-articles is not taxable as "Royalty" as per article 12 of the Double Tax Avoidance Agreement (the DTAA) but is in the nature of business income. Ruling:- 1. The receipt by the applicant from the Indian subscribers and customers for e-books/e-journals/e-articles is not taxable as 'Royalty' as per article 12 of the Double Tax Avoidance Agreement (the DTAA) but is in the nature of "Business Income". 2. The Assessing Officer may ascertain whether permanent establishment (PE) exists in India or not. 3. The Indian subscribers are not required to withhold any tax on the payment made to the applicant under section 195 of the Act.
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