Payments for services without transfer of exclusive rights do not constitute royalty under domestic law or international tax agreements.

ORDER

PER BEENA PILLAI, JUDICIAL MEMBER

Present appeals arises out of the final assessment order dated 07.07.2022 for A.Y. 2019-20 and order dated 10.07.2023 for A.Y. 2020-21 passed by the Ld.DCIT, Intl. Taxation, Circle – 2(2), Bangalore.

2. Grounds of appeal raised by assessee for A.Y. 2019-20 are as under:

Based on the facts and circumstances of the case and in law, Yodlee Inc. (hereinafter referred to as "the Assessee Company" or ''the Appellant") respectfully craves, leave to prefer an appeal under Section 253 (1)(d) of the Income-tax Act, 1961 ("the Act") against the order dated 07 July 2022 issued under Section 143 (3) read with Section 144C (13) of the Act, by the Deputy Commissioner of Income-tax, International Taxation. Circle-2(2), Bengaluru (the "Learned AO") in pursuance of the directions dated 23 June 2022 issued under Section 144C (5) by the Dispute Resolution Panel -2 ("Hon'ble DRP"), Bengaluru, on the following grounds which are without prejudice to each other:

1. That Learned AO/DRP erred, in law and on facts, in computing the total income of the Assessee Company at INR 7,73,71,900.

2. The impugned order of the Learned AO and directions of the Hon'ble DRP are based on incorrect appreciation of facts and law and therefore the final order passed by the Learned AO under Section 143 (3) read with Section 144C (13) is bad in law.

3. The Learned AO/DRP has erred, in law and on facts, by holding that consideration received by the Assessee Company amounting INR 7,73,71,900 towards use of Application Programming Interface is a process to constitute as Royalty under the provisions of the Act and as per the India-US Double Taxation Avoidance Agreement.

4. The Learned AO/DRP failed to appreciate the fact providing access to its Application Programming Interface platform to its customers does not involve any process or for that matter any secret process and therefore the learned AO/DRP has erred in holding the subject consideration received is process royalty under the provisions of the Act and India-US Double Taxation Avoidance Agreement.

5. That on the facts and circumstances of the case and in law, the learned AO/DRP has completely erred in not appreciating the fact that the Assessee grants only the use of the platform with a limited, non-exclusive and non- transferable right, and thus involves only the sale of a copyrighted article.

6. The learned AO/DRP has failed to appreciate that the usage fee collected by the Assessee Company is towards providing access to software application and not towards usage of secret process.

7. The learned AO/DRP has failed to appreciate that the consideration received towards usage fee does not fall under in any of the sub-clauses of Explanation 2 to Section 9 (1)(vi).

8. The learned AO/DRP has failed to appreciate that usage fee earned by the Assessee Company is not a consideration for use or right to use or any copyright of a literary, artistic, or scientific work, including cinematograph films or work on film, tape or other means of reproduction for use in connection with radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience, including gains derived from the alienation of any such right or property which are contingent on the productivity, use, or disposition thereof in accordance with clause 3 of Article 12 of India-US Double Taxation Avoidance Agreement.

9. The learned AO/DRP, has failed to appreciate that the usage fee is in the nature of business receipts w