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2023 (12) TMI 463 - HC - Income TaxIncome taxable in India - granting rights to the customers under EULA to use the software - taxable Royalty receipts both u/s 9(1)(vi) of the Act and under Article 12 of India-USA DTAA - sale of the End User Licence and Annual Maintenance Charges (AMC) - Whether amount received towards annual maintenance charges of the software are not ancillary or subsidiary to enjoyment of right to use software and thus not taxable as FTS/FIS? - HELD THAT:- Tribunal has returned a finding of fact that End User Licences issued by the respondent/assessee to its customers were non-exclusive and non-transferable and that the users were not given access to the source code. As regards the amount which the AO treated as FTS is concerned, the Tribunal concluded that Fee for Included Services (FIS) under the said Article would only mean payment made in consideration for rendering technical or consultancy services, if such services were ancillary and subsidiary to the enjoyment of right in the property. It was the Tribunal’s view that since it had concluded that no right in the property had been transferred, Article 12(4)(a) of the DTAA had no applicability. Tribunal had also examined the applicability of Article 12(4)(b) of the DTAA. Tribunal concluded that the respondent/assessee had not “made available” any technical knowledge, experience, skill, know-how etc, to the recipients of such services. A finding of fact was returned in that behalf. We find that the first issue is covered by the judgment of the Supreme Court rendered in Engineering Analysis Centre of Excellence Pvt. Ltd. [2021 (3) TMI 138 - SUPREME COURT] and the second issue, in any case, is connected, as rightly held by the Tribunal, with the first issue.
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