Law:

Section:

Section 90 of the Income-tax Act, 1961, read with DTAA between Government of Republic of India and Kingdom of Spain - Double taxation agreement - Where agreement exists - Applicant, a non-resident company of Spain, is a subsidiary of D & B - US - Associates and operating subsidiaries of D & B - US - are engaged in compilation and selling business information reports (BIRs) in their local markets and to other associate companies worldwide as their core business - DBIS, an Indian subsidiary of D & B is also engaged in a similar business of compilation and selling of BIRs - Modus operandi of business of DBIS is that whenever an Indian customer places an order for a BIR in respect of a company situated in Spain, DBIS would access master server D & B, US which in turn would allow access to mirror server of applicant situated in US - On locating required BIR, DBIS would download, print and deliver copy thereof to customer and make payment to applicant - Whether in view of fact that applicant permits DBIS to take BIRs from stock maintained by it and it does not permit DBIS to maintain stock of BIRs by itself, it is akin to sale rather than delegation of sale function to DBIS by applicant - Held, yes - Whether since DBIS is carrying on its own business and is an independent entity, not under control and instructions of applicant in carrying on its business and, further, it settles its own price depending upon market conditions and pays purchase price to applicant for BIRs, as fixed by applicant, it cannot be concluded that DBIS itself is an agent of applicant - Held, yes - Whether, therefore, DBIS cannot be said to be a Permanent Establishment (PE) of applicant in India under article 5 - Held, yes - Whether since informations that are provided in a BIR are said to be publicly available and it is not pre-requisite that BIRs must be downloaded by DBIS only, payments made by DBIS to applicant for purchases of BIRs do not answer description of 'royalties' within meaning of article 13 - Held, yes - Whether therefore, payments made by DBIS to applicant for purchase of BIRs will be treated as part of applicant's business profits, covered within provision of…

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