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2019 (9) TMI 51 - AT - Income TaxIncome accrued In India - granting access to CAD/CAM software application - maintenance of software - Royalty under the Act as well as the Double Taxation Avoidance Agreement between India and Sweden (DTAA) - PE in India - HELD THAT:- Unlike the insertion of Explanation 4 to section 9(1)(vi) engulfing consideration for use of software in any form within the ambit of `Royalty’, there is no corresponding amendment in the DTAA and hence the DTAA, in the absence of the applicability of section 90(2A) to the year under consideration, would not automatically imbibe the changes made in the Act. As noticed above that if the provisions of DTAA are more beneficial to the assessee then those would apply in supersession of the provisions of the Act. It is, therefore, held that the sum of ₹ 1.48 crore and odd cannot be construed as `Royalties’ in the hands of the assessee as per the mandate of Article 12 of the DTAA. It is relevant to note that the assessee specifically stated before the AO that it did not have any PE in India and further it is not the case of the AO that the assessee has any PE in India, so as to warrant the consideration of the amount in question as Business profits under Article 7 of the DTAA. Receipts from SAPL for providing maintenance services in respect of GSS software - AO held this amount to be in the nature of ‘Fees for technical services’ u/s.9(1)(vii) of the Act and also under the DTAA - HELD THAT:- Technical services provided by the assessee for maintenance of the existing GSS software supplied to SAPL amounts to rendering of technical or consultancy services simplicitor without `making available’ any technical knowledge, experience, skill, know-how or processes etc. to SAPL for use in future independently. In other words, it is a simple case of providing services involving technical knowledge which exhausted with its provision itself. Since such services did not result into provision of any technical knowledge, experience or skill etc. to SAPL, we are satisfied that the consideration so received by the assessee cannot be categorized as ‘fees for technical services’ in terms of DTAA. Going by the beneficial provision in the DTAA vis-à-vis the Act, this amount is directed not to be considered as fees for technical services. Similar view has been taken by the Tribunal in its afore-referred order in the assessee’s own case for the earlier years. Further, it is not the case of the AO that the assessee has any permanent establishment in India, so as to necessitate the consideration of the aspect of its taxability as Business profits under Article 7 of the DTAA.
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