International Air Transport Association (Canada) Vs ACIT (ITAT Mumbai)
ITAT Mumbai held that sale of Dangerous Goods Regulations manuals could not be characterised as ‘royalty’ within the meaning of Article 12(3) of the India-Canada tax treaty. Accordingly, addition towards sale of manuals is deleted.
Facts- The assessee has developed annual physical publications/manuals for e.g. ‘Dangerous Goods Regulations’ (‘DGR’) publications/manuals that provide information inter-alia pertaining to handling of shipment of dangerous goods. These publications/ manuals could be purchased online by the airlines or any other customer who is involved in the business of transportation of cargo. The DGR publications/manuals published by Assessee is based on the Instruction on Dangerous good developed by International Civil Aviation Organization (ICAO’), a United Nations agency for international air transport. The AO/DRP held the revenue from sale of publications as Royalty in the hands of the assessee.
Conclusion- Held that the consideration received on sale of DGR manuals could not be characterised as ‘royalty’ within the meaning of Article 12(3) of the India-Canada tax treaty as the information provided in the publications was merely a user-friendly and comprehensive compilation of data available in the public domain and hence, the same cannot tantamount to imparting of any information concerning the technical, industrial, commercial or scientific experience. The sale of the DGR manuals tantamount to a simplicitor sale of a copyrighted article with no vesting of any copyright of the same with the customer, the consideration therein received by the assessee cannot be attributed to the ‘use’ or the ‘right to use’ the copyright itself, and thus, on the said count also cannot be brought within the realm of the definition of ‘royalty’ as provided in Article 12(3) of the India-Canada tax treaty.
