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2019 (8) TMI 729

..... stomers/subscribers, on the basis of which they are able to access Gartner’s research products over the internet from its data server which is located outside India in lieu of subscription fees - A.O observed that the assessee as the copyright owner of the research products exploited copyright protection vigorously. HELD THAT:- Tribunal while disposing off the appeal of the assessee for A.Y 2007-08 [2014 (1) TMI 1281 - ITAT MUMBAI] , placed reliance on the decision of the Hon’ble High Court of Karnataka in the case of Wipro Ltd. Vs. ITO [2011 (10) TMI 473 - KARNATAKA HIGH COURT] had concluded, that the subscription fees received by the assessee would constitute ‘royalty’. Admittedly, the issue and also the facts and the circumstances in the present appeal of the assessee remains the same as were involved in its appeals for the preceding years. We uphold the view taken by the CIT(A) that the A.O had rightly concluded that the subscription fees of ₹ 90,10,34,288/- received by the assessee from its Indian customers/subscribers was to be assessed as ‘royalty’ as per the provisions of Sec. 9(1)(vi) of the Act r.w Article 12 of the India-Ireland .....

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..... in form of subscriptions, both in Ireland, and also through its distributors in the territories where the group does not have a local presence. The aforesaid research products consists of qualitative research and analysis that clarifies decision making for Information Technology buyers, users and vendors and helps clients stay ahead of IT trends. The areas of industry covered in such subscriptions include technology and telecommunications including hardware, software and systems, services, IT management, market data and forecasts and vertical industry issues. The various forms of research offered includes statistical analysis, growth protections and market share rankings of suppliers and vendors of IT manufacturers and the financial community. As is discernible from the orders of the lower authorities, the assessee sells subscriptions to its Indian customers/subscribers, on the basis of which they are able to access Gartner s research products over the internet from its data server which is located outside India. The research subscriptions at the nascent stage were delivered through print media and other physical means of delivery, however, with the passage of time the clients woul .....

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..... reland DTAA. The A.O while concluding as hereinabove, observed, that the Hon ble High Court of Karnataka in the case of Wipro Ltd. Vs. ITO (2011) 203 Taxman 621 (Kar), had concluded, that the subscription fees paid by Wipro Limited to the Gartner group for license to use the Gartner database was royalty . Also, he observed that the Tribunal in the assesses own case for A.Y 2007-08 viz. M/s Gartner Ireland Limited Vs. The Asst. Director of Income-tax (International taxation), Mumbai [ITA No. 7101/Mum/2010; dated 24.07.2013], had decided the issue against the assessee and had concluded that the subscription fees received by the assessee fell within the realm of the definition of royalty , and was thus taxable under the Act and also the India- Ireland DTAA. Accordingly, on the basis of his aforesaid deliberations the A.O assessed the subscription fees of ₹ 90,10,34,288/- as royalty , and subjected the same to tax @10% on gross basis as per Article 12 of the India-Ireland DTAA. 5. Aggrieved, the assessee carried the matter in appeal before the CIT(A). The CIT(A) observed that the Tribunal while disposing off the appeals of the assessee for the preceding years, viz. A.Ys 2003-04, .....

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..... , and it was held by the High Court that the subscription charges paid by Wipro Limited to Gartner group was royalty under the provisions of the domestic tax laws of India as well as under the India-Ireland DTAA. On the basis of the aforesaid order of the Hon ble High Court of Karnataka in the case of Wipro Ltd. Vs.. ITO (2011) 203 Taxman 621 (Kar), the revenue had assailed the order of the Tribunal for A.Y 2004-05 before the Hon ble High Court of Bombay, which had admitted the appeal, vide its order dated 16.04.2014 . 9. Subsequently, the Tribunal while disposing off the appeal of the assessee for A.Y 2007-08 vide its order passed in ITA No. 7101/Mum/2010, dated 24.07.2013, placed reliance on the decision of the Hon ble High Court of Karnataka in the case of Wipro Ltd. Vs.. ITO (2011) 203 Taxman 621 (Kar), and had concluded, that the subscription fees received by the assessee would constitute royalty . The Tribunal in its order had observed as under: 6. We are not convinced with the submissions advanced on behalf of the assessee for the obvious reason that the Hon ble Karnataka High Court considered a case in which Wipro Limited made payment to the assessee and the same has been h .....

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..... dingly, we uphold the view taken by the CIT(A) that the A.O had rightly concluded that the subscription fees of ₹ 90,10,34,288/- received by the assessee from its Indian customers/subscribers was to be assessed as royalty as per the provisions of Sec. 9(1)(vi) of the Act r.w Article 12 of the India-Ireland DTAA and subjected to tax @10% on gross basis as per Article 12 of the India-Ireland DTAA. 10. The appeal filed by the assessee is dismissed. A.Y 2014-15 ITA No. 167/Mum/2018 11. We shall now advert to the appeal of the assessee for A.Y 2014- 15. The assessee has assailed the impugned order on the following effective grounds of appeal before us : Ground No. 1:- Erroneous treatment of Business income as Royalty income. On the facts and circumstances of the case and in law, the Ld. Deputy Commissioner of Income-tax- International Taxation 2(3)(2) [Ld. DCIT] has erred in treating and further the Honble Commissioner of Income-tax (Appeals)[CIT(A)] has erred in confirming that the entire income earned by way of sale of online subscription based products amounting to ₹ 126,50,63,210/- by the appellant during the captioned year are taxable as royalty under section 9(1)(vi) o .....

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..... ase of Wipro Ltd. Vs. ITO (2011) 203 Taxman 621 (Kar), had concluded, that the subscription fees paid by Wipro Limited to Gartner group for license to use the Gartner database was royalty . Also, it was noticed by him, that the Tribunal in the assesses own case for A.Y 2007-08 viz. M/s Gartner Ireland Limited Vs. The Asst. Director of Income-tax (International taxation), Mumbai [ITA No. 7101/Mum/2010; dated 24.07.2013], had decided the issue against the assessee and had concluded that the subscription fees received by it fell within the realm of the definition of royalty and was taxable under the Act and also the India-Ireland DTAA. It was also noticed by him that the Tribunal while disposing off the appeals of the assessee for A.Ys 2003-04, 2005-06, 2008-09, 2009-10 and 2010-11, had vide its order passed in ITA Nos. 2619 to 2622/Mum/2014 and ITA No. 4534/Mum/2014, dated 21.09.2016, had followed its earlier view and had concluded that the subscription charges received by the assessee fell within the ambit of royalty and was taxable as per the Act/DTAA. Accordingly, on the basis of his aforesaid deliberations the A.O assessed the subscription fees of ₹ 126,50,63,206/- as royal .....

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