Make-available test for software support fees failed, so maintenance and training receipts were not taxable as technical services.

Maintenance, support and training receipts for software were examined under section 9(1)(vii) of the Income-tax Act and Article 12(4) of the India-Singapore DTAA. The services consisted of telephone, email and remote-login assistance, corrective maintenance, standard updates and user training, with the customer's in-house team acting as the interface for bug reports and operational issues. On those facts, the arrangement was treated as troubleshooting and support for software already supplied, not as a transfer of technical knowledge, experience, skill, know-how or process that enabled independent use by the customer. The make-available condition was therefore not satisfied, and the receipts were not taxable as fees for technical services.

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Issues: Whether receipts from maintenance, support and training services rendered in relation to the software were taxable as fees for technical services under section 9(1)(vii) of the Income-tax Act, 1961 and Article 12(4) of the India-Singapore DTAA on the footing that the services made available technical knowledge, experience, skill, know-how or process.

Analysis: The services consisted of telephone, email and remote-login assistance, corrective maintenance, standard updates and training for proper use of the software. The customers used their in-house support teams as the interface for reporting bugs and operational issues, while the assessee only resolved problems in the software supplied by it. The maintenance arrangement was recurring and linked to the licence arrangement, with no onsite team or permanent establishment in India. On these facts, the services were held to be troubleshooting and support services for the software and not a transfer of technical knowledge or expertise that enabled the customer to apply the technology independently. The make-available condition was therefore not satisfied.

Conclusion: The receipts from maintenance, support and training services were not taxable as fees for technical services under Article 12(4) of the India-Singapore DTAA, and the addition was deleted in favour of the assessee.

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