TMI Blog2021 (11) TMI 217X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee read as under:- 1. That on the facts and circumstances of the case and in law, the Ld. AO has erred in assessing the total income of the Appellant under section 143(3) read with section 144C(13) of the Act at INR 102,66,92,087 as against Nil returned income. 2. That on the facts and circumstances of the case and in law, the Ld. AO/Dispute Resolution Panel ( DRP ) have erred in holding that the receipts from Indian customers amounting to INR 102,66,92,087 are chargeable to tax as royalty in terms of Article 12(3) of India-US Double Tax Avoidance Agreement ( DTAA ) and under section 9(1)(vi) of the Act. 2.1 That on the facts and in the circumstances of the case and in law, the Ld. AO/DRP have erred in holding that the subscription charges received under Chemical Abstract Service (CAS) division and Publications (PUBS) division would be chargeable to tax in India under India-US DTAA being received for use or right to use of copyright in artistic, literary or scientific work and/or for use of information concerning industrial, commercial or scientific experience and/or for use of industrial, commercial or scientific equipment. 2.2 That on the facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue. Nothing could be placed on record to suggest that aforesaid decisions have been reversed, in any manner, by any higher judicial authority. In the said background, our adjudication to the appeal would be as given in succeeding paragraphs. 3.1. The material facts are that the assessee being US based nonresident entity in engaged in promotion and development of knowledge in the field of chemistry. It is organized into various divisions which are as under:- i) Chemical Abstracts Service (CAS) division: This division identifies, aggregates, and organizes publicly disclosed chemistry and related scientific information. It offers online, web-based and desktop access to databases of scientific content to its customers. Search and analysis tools help customers in locating chemistry-related substance information in the databases. ii) Publications (PUBS) division: This division reviews and publishes research work submitted by scientists worldwide. It is engaged in subscription sales of web-based and printed copies of research journals/e-journals in the subject of chemistry, to its subscribers. The assessee grants online/web-based access to e-journals, e-books, chapters, articles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f income for the assessee remains the same in this year is undisputed. The Ld. DRP has followed earlier stand of DRP and chose not to follow the decision of Tribunal since the orders were in further appeal before higher judicial forums. However, as of now, the issues are squarely covered in assessee's favor by cited decisions of Tribunal for AYs 2014-15 to 2016-17 and we see no reason to deviate from the same. The relevant findings of the Tribunal in AYs 2014-15 were as follows:- 11. With respect to the subscription fee for the CAS division being considered as Royalty for use of or right to use of a copyright, a reference to Copyright Act, 1957 is also relevant. A person can be said to have acquired a copyright or the right to use the copyright in a computer software or database (as described by the Assessing Officer), where he is authorized to do all or any of the acts as per the definition of the term copyright under Section 14 of the Copyright Act, 1957. However, mere access to that work or permission to use the work cannot imply that the payer is paying for use or right to use the copyright. In other words, when no copyright is acquired by the payer, question of u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been dealt at length by us in the foregoing paragraphs. The Learned Senior Counsel submitted that the PUBS division of the assessee reviews and publishes research work submitted by scientists worldwide, organizes the same into research journals/e-books and engages in subscription sales of internet and print copies of such research journals. The assessee grants online/web based access to e-journals, e-books, chapters, articles, proceedings, etc., stored on the server, in consideration for an annual fee/subscription charges. Such e-journals/e-books can be searched by a subscriber by using relevant keywords on PUBS website after logging in by using their log-in credentials. Customers are merely granted access to search and view the ejournals and obtain standardized reports/research articles available therein with no right to use the copyright in the e-journals/articles. The agreements (as filed in the Paper book at page 43 to 71) entered by the assessee with the customers provide that copyright in the e-books, e-journals etc., remain with the assessee and the customers do not have any right of ownership on the same. The access to e-journals etc. is given only for limited users and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to make multiple copies for re-sale or to make derivative works of the book, i.e., the purchaser of a book does not obtain the copyright in the book. Similarly, the purchaser of the assessee's journals, articles or database access does not have the right to make copies for re-sale and does not have the right to make derivative works. In short, the purchaser has not acquired the copyright of the article or of the database. What the buyer gets is a copyrighted product, and accordingly the consideration paid is not royalty, but for purchase of a product. In the instant case too, what is acquired by the customer is a copyrighted article, copyrights of which continue to lie with assessee for all purposes. It is a well settled law that copyrighted article is different from a copyright, and that consideration for the former, i.e. a copyrighted article does not qualify as royalties. 19. Thus, the principles noted by us in the earlier part of this order in the context of the income earned by way of CAS fee are squarely applicable to the subscription revenue received from customers of PUBS division for sale of journal also, and accordingly PUBS fee also does not qualify as 'Roya ..... X X X X Extracts X X X X X X X X Extracts X X X X
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