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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 ..... could be seen, from the observations of the AO, except making a general statement that the make available condition u/A 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 utilizing the technical know-how, knowledge, skill, etc acquired from the assessee. AO has alleged that the assessee has failed to furnish necessary details/documents, however, he has not elaborated what were the informations required from the assessee. Unfortunately, Ld. DRP has mechanically endorsed the view of the AO without examining the issue both factually and legally with proper application of mind. Since, the Departmental Authorities have failed to demonstrate that the make available condition enshrined in Article 12(4)(b) of the tax treaty is satisfied, we are unable to sustain the addition as FTS/FIS. Accordingly, the Assessing Officer is directed to delete the addition. Addition of an amount received from AU ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 amounting to Rs. 41,50,226/-. The reason of showing nil tax liability, according to the assessee was, the receipts from the business activity in India are in the nature of business income and in absence of Permanent Establishment (PE) in India, are not taxable. In course of assessment proceeding, the Assessing Officer called upon the assessee to furnish the details and receipts earned in India. On examining the details, the Assessing Officer found that assessee had following receipts:- i. Rs. 2,55,02,202/- towards Management Fees from Tagit India Pvt. Ltd. ii. Rs. 1,60,00,000/- towards License Fees from AU Small Finance Bank Ltd. 4. In so far as Management Fee is concerned, the assessee submitted that the services are provided to the Indian subsidiary on remote basis from Singapore without any human intervention. It was further submitted that even assuming that the services rendered are of managerial, technical or consultancy nature, however, in course of rendition of such services, the assessee had not made available the technical knowledge, know ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be rendered on remote basis from Singapore. For rendition of such services, the assessee receives certain amounts towards fees from the Indian subsidiary. The crucial issue requiring consideration is whether in course of rendition of such services, the 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 utilizing the technical know-how, knowledge, skill, etc acquired from the assessee. 8. Though, the Assessing Officer has alleged that the assessee has failed to furnish necessary details/documents, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e material available on record. On perusal of software license agreement dated 28th December, 2018, a copy of which is placed at page 26 of the Paper book, it is observed that what the client in India purchases from the assessee are software licenses, over which the assessee owns Intellectual Property Rights (IPRs). The agreement further states that end users are the customers of the client, who are using the software. Towards sale of such software, the assessee received license fee as contemplated under the license agreement. Further, the definition of software means, assessee s proprietary computer programme specified in schedule A of the agreement in respect of which the client is granted license, which has to be loaded to the computers of the client. In clause 2 of the agreement, it is specifically provided that the assessee grants a perpetual, non-exclusive and non- transferable license to install and use the software on the system. It further provides the right to make a full and complete copy of the software for archival or re-build purposes only (limited to a maximum of two copies), provided that all copies of the software and the licensed materials will be subject to the t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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