Factiva Limited Vs ACIT (ITAT Mumbai)
Mumbai Tribunal has once again reaffirmed its consistent view that payments received by the UK-based company for providing database access to its Indian distributor Dow Jones Consulting India Pvt. Ltd. (DJCIPL) & subscription fees from KPMG cannot be treated as “royalty” either u/s 9(1)(vi) of the Act or under Article 13(2) of the India–UK DTAA. Tribunal also held that DJCIPL does not constitute a Dependent Agent Permanent Establishment (DAPE) of the assessee in India.
Assessee, a UK tax resident engaged in providing global business & financial information products, had entered into a distribution agreement with DJCIPL on principal-to-principal basis. During the relevant years, it received ₹8.14 Cr from DJCIPL towards distribution of its products & ₹3.02 Lakh from KPMG towards direct subscription. AO treated these receipts as “royalty” & held that DJCIPL constituted a DAPE of the assessee. The DRP confirmed the additions by relying on website information (erroneously from Dow Jones & not the Assessee) & invoked MLI provisions to uphold the PE finding.
Before the Tribunal, Assessee contended that identical issues in its own earlier years (AYs 2015-16 to 2020-21) had been decided in its favour, holding that database access is not royalty & no PE exists. It was argued that there was no change in facts or terms of the distribution agreement since 2017, hence the consistent view should apply.
