TMI Blog2004 (12) TMI 304X X X X Extracts X X X X X X X X Extracts X X X X ..... TMI 5 - SUPREME COURT] . The plea of national interest as made by DR though appeals at first sight, on close inspection we find nothing but a plea to ignore law or enactment, such pleas the Tribunal has no power to entertain. Further in the era of globalization when nation after nation are embracing each other in economic collaborations or co-operation, non-discriminatory treatment to one and all is the underlying principle. It would be incorrect to argue a case on a misplaced feeling that foreigners are getting away without paying any tax in India. We find that DTAA offers fair chance to Indian Business Houses outside India and similar treatment should also be extended in India. That is the basis of principle of reciprocity, one of the basic principles entering into agreement for avoidance of Double Taxation. The law should enforce all liability for tax no matter whether it is imposed on nationals or foreigners. Similarly if something is not found to be taxable the same should be excluded as otherwise there would be no difference between levy of tax and expropriation of property. While levy of tax is legal, expropriation is illegal. Thus, we feel the appeals are allowable and acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sponsorship ---------------------------------------------------------------- The appeals pertain to payments grouped in Table-I which are essentially annual subscription/fee paid for providing access to information available in the data base maintained by GG Service. As regards payments made and listed in Table-H above, no tax was deducted but are not treated as income of GG for deducting tax under section 195 of the Act. Brief facts of the issue are the appellant subscribed on annual and semiannual basis to avail the business data collated, collected and maintained by GG, USA. M/s. GG, an internationally renowned, specialized agency which maintains and publishes the business data pertaining to the technology/software area of business. The data and analysis available with GG is published periodically through the web and on subscription. In depth information collected by GG is made available to all those who are willing to pay. From the contract of subscription entered into by the appellant, it is seen that GG maintains the data on a clustered basis and the data so maintained are all copyrighted in Stamford, CT-06904, USA. The payment is made in terms of the agreement titled as "In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow information gets imparted by a mere access fee [ref.: 182 CTR 353 (MP)]. The liability under the Act is established only when a charge is specific. If the charge is dilatory, illusory or ambiguous as is evident by the Assessing Officer's discussion, the charging section fails as held in 55 ITR 74 (SC). It is clear that the Assessing Officer has not established any liability under any specific section unless it is an income chargeable to tax in India, section 195 is not applicable. It is a matter of significance that section 194J applicable to Technical Services has not been made applicable to subscription of similar nature made within the country. By the same logic it cannot be applied for payment outside the country. It may be noted that section 194J incorporates section 9(1)(vii) on the Act. Further, India is a firm believer of non-discriminatory regime of taxation. Hence, a non-resident cannot be given a different interpretation when the same is not given to the residents. The Assessing Officer has not established that any income accrues or arises in India to Gartner from the payments made to it by the assessee outside India. The subject-matter of the contract consisting of v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome from export arises from a source outside India. Consequently, it is exempted. For these reasons and reasons already stated the liability under section 195 may be deleted in the interest of justice and render justice." 3.1 Sri Pradeep further argued that there was nothing in section 9(1)(vi) of the IT Act read with Explanation 2 which establishes any kind of liability for deduction of TDS on a payment made towards subscription for web based journal or magazine. Scientific journals or business journals published periodically containing views, opinions and news are not covered within the purview of section 9(1)(vi) of the Act. He argued when a printed journal does not come under the purview, a web/electronic media based journal should also be similarly treated A journal published by GG contains information though of a technical nature cannot be regarded as imparted. It is not clear from the orders of the authorities below as to which of the sub-section brings the impugned transaction in the net of taxation. 3.2 Learned CIT(A) in his order particularly in Para 10.12 has held that 'Gartner provides information concerning commercial knowledge but the informations also contain commerc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the parties is only information which is in the sphere of collection of data in the subject available in the market. That apart, as already indicated that every information would not have in the status of royalty. There are various kinds of categories of information. Solely because an entry of the commercial nature would not make it royalty. That cannot be the exclusive base of foundation. Some sort of expertise of skill is required. The aforesaid factor would be the requisite one. The submission that every information if it concerns the industries or commercial venture would be a royalty cannot be accepted. That would tantamount to state the law quite broadly." 3.4 He further submitted that since all the services were utilized by the company particularly by the marketing personnel in understanding and broadening the knowledge. It was submitted that the assessee is engaged in business of providing of software service outside India. It exports to large number of North American, European and Asian countries and consequently the source of income wherein the services of Gartner are utilized is a source of income earned from outside India and any payment made to person who is a non-re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and interesting. However, we do not find it necessary to extract all the references made to OECD convention as it is not relevant for the issue on hand. Accordingly, the learned DR sought for dismissal of the appeal. 4.2 In reply, Sri Pradeep brought to our notice that the argument of national interest while appealing would not be relevant for taxation purpose as held by Hon'ble Supreme Court in the case of Union of India v. Azadi Bachao Andolan [2003] 263 ITR 706 wherein at page 763 the court observed thus: "We are unable to agree with the submissions that an act which is otherwise valid in law can be treated as non est merely on the basis of some underlying motive supposedly resulting in some economic detriment or prejudice to the national interests, as perceived by the respondents." So the argument of national interest cannot decide the issue of tax liability as canvassed by the learned DR. He further submitted that when the law on the subject was still in nascent or evolving stage, the assessee cannot beheld liable on an experimental basis. 5. We heard the arguments on both the sides and also have perused at length all the documents, case laws, DTAA conventions, commentaries o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty; (iii) the use of any patent, invention, model, design, secret formula or process or trademark or similar property; (iv) the imparting of any information concerning technical, industrial, commercial or scientific knowledge, experience or skill; (iva) the use or right to use any industrial, commercial, or scientific equipment but not including the amounts referred to in section 44BB; (v) the transfer of all or any rights (including the granting of a licence) in respect of any copyright, literary, artistic, or scientific work including films of video tapes for use in connection with television or tapes for use in connection with radio broadcasting, but not including consideration for the sale, distribution or exhibition of cinematographic films; or (vi) the rendering of any services in connection with the activities referred to in sub-clauses(i) to (iv), (iva) and (v)." Article 12(3)(a) of the DTAA between India and USA. "(a) payments of any kind received as consideration for the use of, or the right to use, any copyright of a literary, artistic, or scientific work, including cinematograph films or work on film, tape or other means of reproduction for use in connection with radio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not to allow access to the Services by (1) more than the maximum number of Users licensed and (2) employees who do not reside within the country set forth in the Service Agreement. Each User may print one copy of any Gartner research, as the Program allows, for the User's personal use. Such copies may not be further reproduced, or distributed to any party. Electronic mail and "copy and paste" operations are allowed to Users only." In this case facts are not in dispute that the GG was web based publishing house giving access to the data base to all those who are willing to pay. These payments are towards obtaining of market data and client's strategy details etc. These are publications and is not an information or advice given individually. The information is available on subscription to anyone willing to pay. Further, it is a copyrighted information and cannot be passed on to anyone else. There is no licence granted to the assessee to use in any manner or quote to anyone else. Even the access is restricted to specific individuals named by the assessee and does not extend to anyone wanting to use. Annual subscription is an access fee to Gartner database maintained outside India. F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade is not subject to deduction of tax at source under section 195. On this basis we feel the law is very clear that the payments to GG is not liable for taxation in India, consequently the assessee has no obligation to deduct tax under section 195 of the Income-tax Act. When the law is clear and unambiguous on the liability to tax, it is not possible to confirm the liability on emotional plea of national interest as held by Hon'ble Supreme Court in Azadi Bachao Andolan's case. 5.3 We also feel that the correct recognition of national interest is rule of law impartially applicable to one and all without fear or favour to any one giving a full meaning to the Act and the Constitution, so as to achieve the dreams of founding fathers as found in the preamble to the Constitution. The plea of national interest as made by DR though appeals at first sight, on close inspection we find nothing but a plea to ignore law or enactment, such pleas the Tribunal has no power to entertain. Further in the era of globalization when nation after nation are embracing each other in economic collaborations or co-operation, non-discriminatory treatment to one and all is the underlying principle. It would b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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