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TMI Blog2024 (6) TMI 322X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2. Ground No.1, being general in nature does not require adjudication. 2. In ground No.2, the assessee has challenged the taxability of Rs. 2,55,02,202/- as Fees for Included Service (FIS)/Fees for Technical Services(FTS). 3. Briefly the facts relating to this issue are, the assessee is a non-resident corporate entity and incorporated in Singapore and tax resident of Singapore. As stated by the Assessing Officer, the assessee is engaged in the business of providing management services and sales of software license to its customers in India. For the assessment year under dispute, the assessee filed its return of income on 30.09.2019 declaring income of Rs. 2,55,02,202/- with Nil tax liability and claiming refund of the entire TDS amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red. Referring to the Management Services Agreement, the Assessing Officer observed that the services are in the form of management services for the benefit of the group in terms of standardization of corporate work of the group. He observed that being in the nature of managerial services, the fees are taxable are as FTS in terms of section 9(1)(vii) of the Act. Proceeding further, he observed that in course of rendition of such services, the assessee has also made available technical knowledge, know-how, skill, etc. Thus, he held that in terms of Article 12(4) of the India Singapore DTAA, these are taxable as FTS. Accordingly, he proposed a draft assessment order. 5. Being aggrieved with the order of the Assessing Officer, the assessee ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has made available technical knowledge, know- how, skill, etc. to the employees of the Indian Subsidiary, so as to enable the Indian Subsidiary to perform such services themselves without further aid and assistance of the assessee in future. As could be seen, from the observations of the Assessing Officer, except making a general statement that the make available condition under Article 12 of the Income Tax Treaty is satisfied, he has failed to demonstrate or bring out on record any convincing reasoning to establish that, in course of rendition of services, the assessee has made available technical know-how, knowledge, skill, etc to the service recipient, so as to enable service recipient to perform such services independently by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nology and, in turn, require some kind of specialised training in order to make them usable. He observed that these are not one-way interactions wherein the end-user is a mute participant at the receiving end. Instead, these are two way interactions wherein the end-user has the choice as well as the ability to decide how such services are to be utilised by it independently. He observed that the assessee company provided necessary digital infrastructure to keep it running seamlessly. Thus, he held that the assessee company is not selling a standard off the shelf/non-customised/electronically downloadable software. Rather, it is offering comprehensive service experience or solutions with the help of the technology embedded in its software. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re and the licensed materials will be subject to the terms of the agreement. Clause 2.2 of the agreement provides that the software can only be installed in the system situated in the premises specified in Schedule-B and further, only the legal entities set out in Schedule-B may use the software. At no time shall any legal entity other than that named in Schedule B be permitted to use the Software. Schedule 'A' provides list of software as under:- i. Server Software: Mobeix Platform v6.10 ii. Mobile Banking application for the purpose of accessing the Server Software: Mobeix Mobile Client v6.10 and Desktop client v6.10. iii. Mobile Platform Binaries v6.10 for iOS and Android. 12. Schedule 'B' reads as under:- i. Premises where the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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