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12. Regarding the payment made to Cambridgesoft Coro USA for Rs. 3,16,81,125 for purchase of ChemOffice enterprise, the AO found the ChemOffice is a software and purchase of software falls under category of fees for Royalty and therefore the same should be subject to withholding tax.

13. Regarding payment to 3 parties being Chemical Abstract Services USA, Thomson Reuters INC USA, and Elsevier BV Netherlands for subscription of chemistry data base, science publications, and journals, the Assessing Officer was of the view that this payment is for exploitation of copyrighted database, through licence, and accordingly, taxable as royalty. It was noted that 'royalty' has been defined as "payment of any kind received as a consideration for the use of, or right to use of, any copyright of literary, artistic or scientific work" and that the expression "literary work", under section 2(o) of the Copyright Act, includes 'literary database'. It was also noted that the non-resident, to whom the payment in question was made, holds rights/copyrights which are granted under non- exclusive and non-transferable basis, for access to licensed material. It was in this background that the Assessing Officer held that the assessee ought to have deducted tax at source from the payments so made to the non-residents as these were taxable as 'royalty' under the related tax treaties.

11. Ground no. 1 is thus dismissed.

20. Likewise, the issue of payment made for use of science data base, subscription of journal& Publication is also covered in favour of the assessee by the order of this Tribunal in the own case of the assessee for AY 2010-11(supra). The relevant finding is extracted as under:

13. So far as this ground of appeal is concerned, the relevant material facts are as follows.

During the course of proceedings before the Assessing Officer, it was noticed that the assessee has made a payment of Rs 16,30,690 to a US based entity by the name of Chemical Abstract Service for access to database. The Assessing Officer was of the view that this payment is for exploitation of copyrighted database, through licence, and, accordingly, taxable as royalty. It was noted that 'royalty' has been defined as "payment of any kind received as a consideration for the use of, or right to use of, any copyright of literary, artistic or scientific work" and that the expression "literary work", under section 2(o) of the Copyright Act, includes 'literary database'. It was also noted that the non resident, to whom the payment in question was made, holds rights/copyrights which are granted under non exclusive and non transferable basis, for access to licensed material. It was in this background that the Assessing Officer held that the assessee ought to have deducted tax at source from the payments so made to the non residents as these were taxable as 'royalty' under the related tax treaties. Accordingly, tax withholding demand under section 201 r.w.s 195 was raised on the assessee. Aggrieved, assessee carried the matter in appeal before the CIT (A) who held the payment in question was not in the nature of royalty as it was not use of the copyright but a copyrighted material, and, accordingly, deleted the impugned demand. While doing so, learned CIT (A) reasoned as follows:

(b) payment of any kind received as consideration for the use of, or the right to use, the industrial, commercial, or scientific equipment, other than payments derived by an enterprise described in paragraph 1 of Article 8 (Shipping and Air Transport) from activities described in paragraph 2(c) or 3 or Article 8."

17. We find that as the treaty provision unambiguously requires, it is only when the use is of the copyright that the taxability can be triggered in the source country. In the present case, the payment is for the use of copyrighted material rather than for the use of copyright. The distinction between the copyright and copyrighted article has been very well pointed out by the decisions of Hon'ble Delhi High Court in the case of DIT v. Nokia Networks OY [2013] 358 ITR 259/212 Taxman 68/25taxmann.com 225. In this case all that the assessee gets right is to access the copyrighted material and there is no dispute about. As a matter of fact, the AO righty noted that 'royalty' has been defined as "payment of any kind received as a consideration for the use of, or right to use of, any copyright of literary, artistic or scientific work" and that the expression "literary work", under section 2(o) of the Copyright Act, includes 'literary database' but then he fell in error of reasoning ITA no.36/AHD/2021 Asstt. Year- 2012-13 inasmuch as the payment was not for use of copyright of literary database but only for access to the literary database under limited non exclusive and non transferable licence. Even during the course of hearing before us, learned Departmental Representative could not demonstrate as to how there was use of copyright. In our considered view, it was simply a case of copyrighted material and therefore the impugned payments cannot be treated as royalty payments. This view is also supported by Hon'ble Bombay High Court's judgment in the case of DIT (International Taxation) v. Dun & Bradstreet Information Services India (P.) Ltd. [2011] 338 ITR 95/[2012] 20 taxmann.com 695.