Sale of DGR manuals/publications is a sale of copyrighted articles and not royalty.
Mumbasi ITAT has recently held that sale of DGR manuals/publications is a sale of copyrighted articles and not royalty.
Let us have a Short Overview of the case:
Mumbai Tribunal in IATA (Canada)
Background:
The International Air Transport Association (IATA) is a non-profit organization incorporated under the Special Act of Parliament of Canada and is a tax resident of Canada. IATA has a BO in India approved by the RBI.
Issues Contended:
Provision of Distance Learning Courses: The AO/DRP treated the Authorized Training Centres (ATCs) as Dependent Agent Permanent Establishments (DAPE) of IATA and attributed 40% of the revenue from distance learning courses as business income taxable in India.
Sale of Physical Publications: The AO/DRP treated the revenue from the sale of publications/manuals as royalty income taxable in India.
Provision of Advt Space: The AO/DRP treated the revenue from providing advt space on IATA’s website and publications as royalty income taxable in India.
Database Access Facility: The AO/DRP treated the revenue from database access as royalty income taxable in India.
Survey Charges: The AO/DRP treated the income from conducting passenger satisfaction surveys as business profits taxable in India, considering Mind-set SA as an agent of IATA.
Joining & Annual Fees for IATA Clearing House Facility and Data Processing Charges: The AO/DRP treated these fees as business income attributable to IATA’s Indian branch and taxable in India.
Tribunal’s ruling:
Provision of Distance Learning Courses: The Tribunal held that the ATCs are independent entities and not DAPE of IATA, relying on the decision of the earlier AY. The revenue from distance learning courses is not taxable in India.
Sale of Physical Publications: The Tribunal held that the sale of DGR manuals/publications is a sale of copyrighted articles and not royalty. This was decided relying on the Delhi HC ruling in case of Infrasoft, which was upheld by the SC in Engineering Analysis. The revenue from the sale of publications is not taxable in India.
Provision of Advertising Space: The Tribunal held that the revenue from providing advertising space does not involve the use or right to use any copyright, patent, trademark, etc., and is not royalty. This was decided basis the ruling of earlier AY. The revenue from advertising space is not taxable in India.
Database Access: The Tribunal held that the revenue from database access is similar to the sale of publications and is not royalty, largely relying on the SC decision in case of Engineering Analysis. The revenue from database access is not taxable in India.
Survey Charges: Relying on the similar principals dealt in Provision of Distance Learning Courses above, the Tribunal held that Mind-set SA is an independent entity and not an agent of IATA. The revenue from survey charges is not taxable in India.
Joining & Annual Fees for IATA Clearing House Facility and Data Processing Charges: The Tribunal held that these fees are not taxable in India based on the principle of mutuality.
The views expressed in this summary are entirely personal and do not reflect those of any professional firm.
The copy of the order is as under:
