S.9(1) (vii): Income deemed to accrue or arise in India – Fees for technical services-Website-DTAA-India –
United Kingdom – Payment for subscription made by garment manufacturer to an online fashion storeis
royalty matter remanded back to Commissioner (Appeals). (S.90, 195, Art.7, 13 )
Assessee, a resident, was engaged in business of fashionable ready to wear garments. In order to get international trend analysis and other information relating to fashion design and style, it subscribed to internet site of a company located in United Kingdom and paid subscription charges of £ 17,000. Assessee sought certificate for payment without deduction of tax at source under section 195. Assessing Officer rejected application and directed deduction of tax at 15.30 per cent holding said payment as royalty. It was held that subscription made by garment manufacturer to online fashion website is royalty or not, to be decided in light of judgment of Karnataka High Court in CIT (International Taxation) v. Wipro Ltd. [2011] 203 Taxman 621/16 taxmann.com 275. Matter remanded to Commissioner (Appeals) for a specific finding on point of transfer of right to use copy rightin the light of Karnataka High Court’s decision.(AY 2005-06)
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