Whether there is a difference between use of copyrights rights and copyrighted articles?

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Whether there is a difference between use of copyrights rights and copyrighted articles?

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YouTube video link for Hindi video:?https://www.youtube.com/watch?v=5m5rTKfsgqE

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Short note of today's case law for quick reference:

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[2024] 465 ITR 257 (Del)

[IN THE DELHI HIGH COURT]

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COMMISSIONER OF INCOME-TAX (INTERNATIONAL TAXATION)

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SALESFORCE.COM SINGAPORE PTE. LTD.

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YASHWANT VARMA and PURUSHAINDRA KUMAR KAURAV JJ.

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February 14, 2024.

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1. The assessee was a tax resident of Singapore and was stated to provide a customer relationship management services application which was stated to be an “enterprise business application” enabling customers and subscribers to record, store and act upon business data, formulate business strategies and enables businesses to manage customer accounts, track sales positions, evaluate marketing campaigns as well as bettering post sales services.

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2. The A.O. assessed the income derived from the subscription fees which the assessee received from customers in India for providing customer management related services.

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3. On appeals it was held that

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4. Since, the copyright in the application was never transferred nor vested in a subscriber, the fees were not assessable u/s 9 of the act.

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5. Article 12(4)(b) of the DTAA between Singapore and India would have been applicable provided the Department had been able to establish that the assessee had provided technical knowledge, experience, skill, know-how or processes enabling the subscriber acquiring the services to apply the technology contained therein.

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6. The customer was merely accorded access to the application and it was the subscriber which thereafter inputs the requisite data and took advantage of the analytical attributes of the software.

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7. Section 9 defines royalty as the amount received for the transfer of all or any rights (including the granting of a license) in respect of a patent, invention, model, design, secret formula or process or trade mark or similar property.

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8. There is a clear distinction between royalty paid on transfer of copyright rights and consideration for transfer of copyrighted articles.

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9. The right to use a copyrighted article or product with the owner retaining his copyright, is not the same thing as transferring or assigning rights in relation to the copyright.

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10. The enjoyment of some or all the rights which the copyright owner has, is necessary to invoke the definition of royalty.

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11. In order to satisfy the test of Fees for technical services, the services rendered ought to satisfy the make available test and such services should enable the person acquiring the services to apply technology contained therein.