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TMI Blog2025 (5) TMI 711X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeals filed by the Revenue. For ready reference, the grounds raised by the Revenue in its appeal for the assessment year 2015-16 are reproduced as follows: - "1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in holding that the assessee is entitled to the benefits of the India-Singapore DTAA, that the assessee does not have any permanent establishment in India under Article 5 when clearly the assessee's case is that of Maintenance services and training services receipts covered under Article 12 of the DTAA? 2. Whether on the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in not holding that the receipts of the assessee by way of maintenance services and training services 'Fees for technical services' and Taxable u/s. 9(1) of the I.T. Act r.w. Article 12 of the DTAA between India and Singapore." 3. The solitary issue that arises for consideration pertains to the taxability of income earned by the assessee from maintenance services and training services as Fees for Technical Services ("FTS"). 4. The brief facts of the case pertaining to this issue, as emanating from the record, are: The assessee is a co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us should not be taxed in India in the absence of Permanent Establishment in India as per Article 5 read with Article 7 of the India- Singapore Double Taxation Avoidance Agreement ("DTAA"). The assessee further submitted that as per Article 12 of the India-Singapore DTAA, income shall be considered as FTS only if managerial, technical or consultancy services are made available to the service recipient. However, even though the assessee is providing certain technical services to the Indian customers but it is not making them available to the Indian customers. Accordingly, the assessee submitted that the income earned by it from maintenance services and training services is not FTS under the provisions of the India-Singapore DTAA. 7. The Assessing Officer ("AO"), vide order dated 06/02/2018 passed under section 143(3) read with section 144C(3) of the Act, disagreed with the submissions of the assessee and held that the services provided by the assessee are not general in nature and are provided by technical experts/professionals from the field of software and information technology. The AO further held that the assessee is engaged in the business of providing/sub-licensing software ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dinate bench of the Tribunal in assessee's own case in M/s Murex Southeast Asia Pvt Ltd. v/s DCIT, in ITA No. 2338/Mum./2022, for the assessment year 2018-19, vide order dated 08/05/2022, after considering the relevant clauses of the agreement held that maintenance services and training services provided by the assessee to the Indian customers do not fall within the ambit of FTS under Article 12 of the India-Singapore DTAA as the services do not make available any technical skills, knowledge, or expertise etc., which enables the Indian customers to apply the technology contained therein, and therefore the income of the assessee from rendering the services is not taxable in India. The relevant findings of the Co-ordinate Bench, in the aforesaid decision, are reproduced as follows:- "10. After considering the relevant clauses of the maintenance agreement, we find that the assessee rendered maintenance and other support services to the in-house support team of Indian customers through telephone / email/ login assistance with respect to usage of the software programme. Such assistance is by responding to reasonable questions communicated by the in-house support team concerning the us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed only on need basis. Apart from that, as a part of maintenance services, assessee also provides updates to the software programmes like correction of errors, improvements concerning existing functioning of program, and changes intended to improve calculations / results / formulate of software program etc. There is no addition in the functionalities through such update which are only standard updates and not customization. Thus, the entire maintenance service contract is dependent on the software sublicensing agreement. In case of separate agreements for sublicensing and maintenance, there is a termination clause which provides that maintenance services will automatically terminate if software sublicensing contract is expired or terminated. Here, fees for maintenance services are annual and based on a percentage of licence fee and is not dependent upon the number of queries / bugs raised or resolved by the assessee. 12. If it is of recurring annual fees, there is no question that assessee was making available any technology or knowhow of the Indian customers on year to year basis as has been interpreted by the Id. AO. Assessee is having the technical expertise in the software su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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