The applicant is in the business of gathering, collating and making available or imparting information concerning industrial and commercial knowledge, experience and skill and consequently the payment received from the subscriber would be royalty in terms of clause (iv) of Explanation 2 to Section 9(1)(vi) of the Act. If so, the subscription received is royalty liable to be taxed as such under the Act.
Going by the DTAC between India and Singapore, it will qualify as royalty since it is the grant of the use for consideration or right to use for consideration, the process or information concerning industrial, commercial or scientific experience and under the DTAC the subscription received from the Indian subscriber would be taxable as royalty and taxable in India in view of paragraph 2 of Article 12 of the DTAC, subject to the benefit conferred therein on the applicant on fulfilling the condition imposed by that paragraph.
I, therefore, rule on question (a) that the amount received from offering the particular subscription based service is taxable in India as ‘royalty’ in terms of paragraph 2 of Article 12 of the DTAC between India and Singapore and on question (b) that tax is required to be deducted in terms of section 195 of the Act from the payment made to it by the subscribers who are resident in India.
BEFORE THE AUTHORITY FOR ADVANCE RULINGS (INCOME TAX), NEW DELHI
7th Day of April, 2012
Mr Justice P.K. Balasubramanyan (Chairman)
A.A.R. No. 1036 of 2010
