TMI Blog2013 (9) TMI 793X X X X Extracts X X X X X X X X Extracts X X X X ..... o use the confidential name and passwords, if any, subject to the condition to enter the restricted portion of the website for the sole purpose of down- loading to a permitted computer and reproducing in storage media of a permitted computer copies. The terms of the agreement shall end at 00.01 GM on the last of the then current terms unless such terms are extended or terminated. If the totality of the facts are analysed the information/know- ledge available to the assessee was made through a licence ; consequently, it is covered under the definition of royalty under the domestic law under section 9(1)(iv) and (vi) along with article 13(3) of the Double Taxation Avoidance Agreement with the U.K. - Decided against assessee. - - - - - Dated:- 16-11-2012 - Order The order of the Bench was delivered by Joginder Singh (Judicial Member).-This bunch of five appeals is by the assessee for the assessment years 2007-08 to 2009-10 on the ground that on the facts and in the circumstances of the case, the learned first appellate authority erred in law and in fact in upholding the assessment order under section 195/197 of the Act ignoring the agreement, definition of royalty, and furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch payment. The learned senior Departmental representative invited our attention to page 34 of paper book-1 by submitting that it is payment for technical consultancy, therefore, TDS has to be deducted. It was emphatically argued that oil and natural gas is a specialised sector, therefore, it cannot be termed as a general information. More specifically, the assessee engaged WM as an expert adviser and it was a research agreement. The plea was also raised that specialised training along with password are required for such use and access to the system is very specialised. Our attention was invited to page 23 of the paper book to the effect that even the passwords were provided by WM. Further attention was drawn to page 27 of the paper book containing paragraphs 1.5 and 1.6. The crux of the argument is that it is pure technical information, so TDS was required to be deducted. We have considered the rival submissions and perused the material available on record. In the captioned appeals, since the issues are identical, therefore, these appeals were heard together, consequently can be disposed of by this common and consolidated order for the sake of brevity. The facts, in brief, are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aving no right to sub-licence, therefore, it is covered under the definition of "royalty" under domestic law under section 19(1)(vi) as well as article 13(3) of the Double Taxation Avoidance Agreement with the U.K. Consequently, the stand of the Assessing Officer was affirmed. Now, the question to be adjudicated by us is whether the subscription fees paid by the assessee to WM constitute royalty for information concerning industrial, commercial or scientific experience and the same is taxable under section 19(1)(vi) and article 13(3) of the Double Taxation Avoidance Agreement with the U. K. The stand of the assessee is that it is merely a subscription fees and can be used by any person after going to the website of WM and it is merely a general information whereas the stand of the Revenue is that it is a royalty paid for getting such information for which password are supplied by WM, specialised skill is required for accessing and that too through an agreement. Still for better appreciation, we are reproducing hereunder section 9(1)(vi) of the Act regarding royalties : "(vi) income by way of royalty payable by (a) the Government ; or (b) a person who is a resident, except w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome first becomes chargeable to tax under this Act, whichever assessment year is later, the company exercises an option by furnishing a declaration in writing to the Assessing Officer (such option being final for that assessment year and for every subsequent assessment year) that the agreement may be regarded as an agreement made before the 1st day of April, 1976. Explanation 2.-For the purposes of this clause, 'royalty' means consideration (including any lump sum consideration but excluding any consideration which would be the income of the recipient chargeable under the head 'Capital gains') for (i) the transfer of all or any rights (including the granting of a licence) in respect of a patent, invention, model, design, secret formula or process or trade mark or similar property ; (ii) the imparting of any information concerning the working of, or the use of, a patent, invention, model, design, secret formula or process or trade mark or similar property ; (iii) the use of any patent, invention, model, design, secret formula or process or trade mark or similar property ; (iv) the imparting of any information concerning technical, industrial, commercial or scientific k ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India ; or (c) a person who is a non-resident, where the fees are payable in respect of services utilised in a business or profession carried on by such person in India or for the purposes of making or earning any income from any source in India : Provided that nothing contained in this clause shall apply in relation to any income by way of fees for technical services payable in pursuance of an agreement made before the 1st day of April, 1976, and approved by the Central Government. Explanation 1.-For the purposes of the foregoing proviso, an agreement made on or after the 1st day of April, 1976, shall be deemed to have been made before that date if the agreement is made in accordance with proposals approved by the Central Government before that date. Explanation 2.-For the purposes of this clause, 'fees for technical services' means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tream services in 2006 was amounting to A 9,56,250 (nine hundred fifty-six thousand two hundred and fifty pounds sterling) and 3 per cent. average increase in fees for the product for the second and third year of the term. Thus, the overall fee, as per the agreement, was A 1,025,662 (One million and twenty five thousand six hundred and sixty two pounds sterling). Certain corporate incentives were also offered (page 22 of the paper book). It is pertinent to mention herein that WM agreed to provide a two-days training programme per annum on upstream services during the period of contract (first year) for 20 individuals. For getting such services for the research, telephone and e-mail access to the industry analysed was also required. A specific fee (page 25 of the agreement) has been mentioned as access fee subject to the liabilities/ terms and conditions. We are usefully reproducing hereunder the restrictive clause (page 27 of the paper book) : "1.5 The user names and passwords provided to you constitute trade secrets and proprietary and confidential information of Wood Mackenzie, and you and your officials shall protect each such user name and password as a trade secret. Wood M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... knowledge or skill can be used in terms of the agreement only. It is not the case that any person from the public can access this facility without an agreement or without making any payment. Therefore, nature of the payment has to be seen. In our considered view, certainly the payment is in the nature of technical consultancy. Oil and natural gas and its exploration are a field of specialised technical knowledge and not for the use of public at large. A specific training is required in the field. The information obtained by the assessee are also of technical nature. Therefore, the contention of the assessee that it contains general information is without any justification. So far as the reliance upon the decision of Wipro Ltd. v. ITO [2005] 278 ITR (AT) 57 (Bang) and other cases are concerned, in the case of Dun and Bradstreet Espana S.A., In re [2005] 272 ITR 99 (AAR) is concerned, the information provided in business information reports (BIRs) was publicly available and it was only being compiled by D and B Associates. However, in the present case, what is being assessed by the assessee was a scientific work which has a character of intellectual property compiled on the web- si ..... X X X X Extracts X X X X X X X X Extracts X X X X
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