Support and maintenance services linked to software sales did not satisfy the make available test and were not taxable as FTS.

Support and maintenance receipts linked to software sales were held not taxable in India as fees for technical services under the India-Singapore DTAA. Under Article 12(4)(a), the services could not be treated as ancillary and subsidiary because the related software licence receipts were not taxable as royalty under Article 12(3)(a). Under Article 12(4)(b), although the services were technical, they did not make available technical knowledge, experience, skill, know-how or processes for independent future use. The services were consumed on rendition and therefore fell outside the make available requirement, so the addition was deleted.

---

---

Issues: Whether receipts from support and maintenance services rendered in relation to software sold were taxable in India as fees for technical services under the India-Singapore DTAA and the Act.

Analysis: The services were examined under Article 12(4)(a) and Article 12(4)(b) of the DTAA. For Article 12(4)(a), the services could be ancillary and subsidiary only if there was a corresponding royalty payment under Article 12(3)(a); since the software licence receipts themselves were not taxable as royalty, the support and maintenance receipts could not be brought within that clause. For Article 12(4)(b), the services were technical in nature, but the recipient did not acquire technical knowledge, experience, skill, know-how, or processes so as to apply the technology independently in future. The services were consumed upon rendition and did not satisfy the make available requirement.

Conclusion: The support and maintenance receipts were not taxable as fees for technical services under either clause and the addition was deleted in favour of the assessee.

---