9911796707
TMI Blog2024 (10) TMI 1475X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be treated as FIS under Article 12(4)(a) of India USA DTAA, the AO has taken a conscious decision not to invoke Article 12(3) and Article 12(4)(a) of India USA DTAA to tax the receipts. Thus, the only course left open with the AO to rope in the receipts within tax net is to invoke Article 12(4)(b) of India USA DTAA. However, the said provision requires fulfillment of the make available condition. A reading of the assessment orders should reveal that except making general observations that while rendering services the assessee has made available technical knowledge, know-how, skill etc. to the recipient of services, the Assessing Officer has not brought on record any cogent material/ evidence to establish such fact. Even, same is the position with learned DRP as no effort has been made by learned DRP to establish that make available condition stands satisfied. Now, it is fairly well settled that technical knowledge, knowhow, experience, skill etc. are made available to a service recipient when the service recipient is capable of performing such services independently on its own without requiring the aid and assistance of the service provider. No material has been brought on r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A. As stated, the assessee is engaged in the business of developing, manufacturing and distribution of software products. The Assessing Officer has further stated that the assessee has entered into International Distributor/Reseller Agreements with distributors in India for supplying software products and for providing ancillary support services. In course of assessment proceedings for the impugned assessment years, the Assessing Officer noticed that the assessee had received certain amounts from Indian distributors for providing software updates and patches and on-call support services. Being of the view that the amount received by the assessee towards the aforesaid activities are in the nature of FTS/FIS, the Assessing Officer called upon the assessee to show-cause as to why they should not be brought to tax in India. 4. In response to the show-cause notice, the assessee furnished detailed submissions stating that the amount received represents two components, i.e., firstly, for supply of software updates and patches, and secondly, for on-call support services. It was submitted by the assessee that on-call support services cannot be treated as FIS either under Article 12(4)(a) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat in course of rendition of services the assessee has transferred technical knowledge, know-how, skill, experience etc. to the service recipient. He submitted, the Revenue has failed to establish the fulfilment of make available condition. In support of his contention, learned counsel relied upon a catena of judicial precedents as furnished in the case-law compilation. 8. Drawing our attention to the copy of distributors agreement placed in the paper-book, learned Departmental Representative submitted, along with software updates and patches, the assessee also provides support services, which are in the nature of technical/consultancy services coming withing the ambit of FIS as provided under Article 12(4) of India USA DTAA. He submitted, the Assessing Officer has also observed that while rendering such services, the assessee has made available technical knowledge, know-how, skill etc. Thus, he relied upon the observations of Assessing Officer and learned DRP. Further, he submitted, in the preceding assessment year, the Tribunal has not adjudicated as to whether the receipts fall within the ambit of FIS. 9. We have considered rival submissions in the light of decisions relied upo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or assessment year 2015-16, 2016-17 and in the latest order passed for assessment year 2017-18 in ITA No. 06/Del/2021, dated 29.09.2022. 12. Thus, from the aforesaid facts, it is evident that the issue arising for consideration in the impugned assessment years is a legacy issue continuing from assessment year 2014-15 onwards and neither there is any change in the terms of the distribution agreement nor the factual position. However, being conscious of the fact that the receipts can no more be treated as royalty income in view of change in legal position due to the ratio laid down by the Hon ble Supreme Court in case of Engineering Analysis Centre of Excellence Pvt. Ltd. (supra), and secondly, it cannot be treated as FIS under Article 12(4)(a) of India USA DTAA, the Assessing Officer has taken a conscious decision not to invoke Article 12(3) and Article 12(4)(a) of India USA DTAA to tax the receipts. Thus, the only course left open with the Assessing Officer to rope in the receipts within tax net is to invoke Article 12(4)(b) of India USA DTAA. However, the said provision requires fulfillment of the make available condition. A reading of the assessment orders should reveal that exce ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
