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2023 (9) TMI 1222 - ITAT DELHIIncome taxable in India - Taxability of the amount received from sale of software as fees for technical services (FTS) under Article 12(4) of India-Singapore DTAA - assessee purchased software products from third party vendors like Microsoft, Adobe etc. and distributes them to customers in India - HELD THAT:- Interestingly, in the final assessment order, while implementing the directions of learned DRP, the AO has treated part of the receipts from sale of software as FTS. However, on what basis, he bifurcated the receipts between the sale of products and provision of services is not forthcoming. AO has absolutely not made any discussion about the factual aspect of the issue and the evidences examined by him to come to such conclusion. Though, learned Departmental Representative has tried to make out a case before us that certain invoices of the assessee include service component, however, no such fact has been established on record. On verification of copies of invoices placed in the paper book, we are convinced that they are only in respect of sale of software and do not contain any element of service. Thus, in our view, even a part of the receipts cannot fall within the ambit of FTS. Even, assuming for arguments’ sake that a part of the receipts from sale of software also involves service element, hence, to be treated as FTS, however, the issue, which arises for consideration is whether such receipts can be treated as FTS under Article 12(4)(b) of India-Singapore DTAA in absence of fulfilment of make available condition. On a reading of assessment order, we do not find any material brought on record by the AO to establish that during rendition of services, the assessee has made available technical know-how, skill etc. to the service recipient so as to enable him to apply technical knowledge, know-how, skill etc in future independently, without the aid and assistance of the assessee. In fact, in the final assessment orders, the Assessing Officer has not made any discussion, under which limb of article 12(4) of India- Singapore DTAA, he has taxed a part of the receipts. In view of the aforesaid, we hold that the additions made by the Assessing Officer are unsustainable. Accordingly, we direct him to delete them.
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