Nature of payments/transactions:

In this case, the applicant, a non-resident company of Spain is a subsidiary of D&B US. DBIS is the Indian subsidiary of D&B US. D&B Associates compiles information in standardised format which is electronically uploaded on the server owned and operated by D&B US. DBIS makes payments for electronic purchase of BIR’s to the applicant for which DBIS is allowed access to the master server in US. DBIS would request the applicant for the BIR and would subsequently download, print and deliver a copy to the customer. DBIS is under an obligation not to take additional copies of the BIR or sell it to any customer other than customer who has raised requisition for the BIR.


The AAR on the basis of factual analysis of the case observed as under:

  • Information provided in BIR are said to be publicly available
  • BIR is accessible by any subscriber on payment of requisite price with regular internet access and does not require any specific software or hardware
  • BIR is available to public at large and does not specifically require DBIS to download the report.
  • Applicant specifically averred that copyright in the BIR would neither be licensed nor assigned to either DBIS or the customer in India

In view of the above factors, the AAR in the case of Dun & Bradstreet Espana5 held that payments made by DBIS to the applicant cannot be regarded as Royalty payment within the meaning of para 3 of article 13 of the India-Spain Treaty. The transaction

  • Dun & Bradstreet Espana, S.A. [2005] 142 taxman 284 (AAR-N.Delhi)
  • ONGC Videsh Ltd. vs. ITO [2013] 31 taxman 119 (Del Trib)

It can be concluded that there are numerous factors
associated with characterisation of payments as
Royalty or otherwise and it is in itself a fact intensive
exercise. In view of the persisting complexity in the
nature of transactions, the judicial opinion also seems
to be divided on this vexed issue.

can be equated to sale of a book which does not involve any transfer of intellectual property and will be covered within the provision of Article 7 of the Treaty.

Our Comments

It may be interesting to note the facts in the case of ONGC Videsh6 where the assessee paid subscription to a website of global energy and mining research unit to get information pertaining to oil and gas industry in different countries by way of research agreement. The assessee was granted non-transferable and non- inclusive license to use secret name and passwords to download desired information from the website. The AO observed that the subscription fee was in the nature of Royalty both under Section 9(l)(iv) of the Act as well as Article 13(3) of the India UK Tax Treaty. The order of the AO was confirmed by Commissioner (Appeals).

The Delhi ITAT, while pronouncing its judgment in ONGC’s case, distinguished the case of Dun & Bradstreet Espana, as the information provided in the BIR was publicly available and was only being compiled by D&B Associates. However, in the case of ONGC Videsh, the assessee sought for segmented information which had a character of intellectual property compiled on the website for the purpose of the persons in the field of oil and gas exploration and production thereof. The Delhi Tribunal held that if the totality of the facts are analysed, the information available to the assessee was made through a license, consequently it is covered under the definition of Royalty both under Section 9(l)(iv) as well as Article 13(3) of the India-UK Double Taxation Avoidance Agreement.

A well-considered view was taken by the AAR on the basis of factual analysis of the case. Since the underlying information of the BIR was publicly available which the assessee merely collated and compiled and no rights in the BIR were licensed to the end user, the payments could not be classified as Royalty. As stated in the earlier paragraph, the Delhi ITAT in case of ONGC has distinguished the AAR


such research information was available under license agreement and was technical in nature and therefore was held to be royalty.

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