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2021 (6) TMI 3 - AT - Income TaxAccrual of income in India - Taxability of SAP License Charges as Royalty - Sale of software or mere reimbursement of expenses - Indo Swedish tax treaty - HELD THAT:- The Tribunal in assessee's appeal [2021 (1) TMI 323 - ITAT MUMBAI] after examining the facts of the case concluded that the receipts of SAP Licence by the assessee from Indian subsidiary is reimbursement and is not taxable as royalty either under domestic tax laws or under the provisions of Indo-Swedish Tax Treaty. Taxability of consultancy services as FTS - HELD THAT:- The Tribunal in assessee's appeal [2021 (1) TMI 323 - ITAT MUMBAI] held that , just because the Indian entity is interacting with the project leader and getting inputs from him does not mean that the Indian entity is transferred the technology of being a project leader of this type and next time Indian entity can perform similar services without recourse to the same-which is the core test for the fulfillment of 'make available' clause. We are unable to approve the stand of the authorities below on this point. In our considered view, in the light of the discussions above, the make available clause is not satisfied, in the course of rendition of services by the assessee, and, as such, the consultancy fees nnot be brought to tax, in the hands of the assessee, under article 12 of Indo Swedish tax treaty. Taxability of IT Support services as FTS/Royalty - HELD THAT:- Indo-Swedish Tax Treaty and the terms of agreement held that the payments received on account of IT Support services are neither taxable as FTS nor Royalty - As decided in own case [2021 (1) TMI 323 - ITAT MUMBAI] the person selling the SAP software is Be One Solution, Switzerland, whereas the person providing the services in question is the assessee. Article 12(4)(a) will not, therefore, come into play at all - therefore, the taxation under article 12 in the present case can come into play only when the "make available" clause is satisfied, but then the AO's justification for the satisfaction of 'make available' clause, for the detailed reasons set out earlier in this paragraph, does not meet our judicial approval. In view of these discussions, as also bearing in mind the entirety of the case, we uphold the plea of the assessee on this point as well. Accordingly, we hold that the income on account of Information Technology Services is also not taxable under article 12. - Decided in favour of assessee.
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