TaxTMI Login
AI Drafter - (New and Powerful) ✕
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
Just a moment...
AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: (i) Whether the receipts from supply of software updates and patches and on-call support services were taxable as Fee for Technical Services / Fee for Included Services under Article 12 of the India-USA Double Taxation Avoidance Agreement. (ii) Whether interest on refund under section 244A of the Income-tax Act, 1961 was to be computed up to the date of issuance of the refund voucher.
Issue (i): Whether the receipts from supply of software updates and patches and on-call support services were taxable as Fee for Technical Services / Fee for Included Services under Article 12 of the India-USA Double Taxation Avoidance Agreement.
Analysis: The receipts comprised two distinct streams, namely, software updates and patches and on-call support services, and the record showed separate invoicing for them. The receipts could not be taxed as royalty in view of the settled legal position, and the attempt to tax them as Fee for Included Services under Article 12(4)(b) required proof that technical knowledge, know-how, skill, experience or processes were made available to the recipient. The revenue did not bring cogent material to establish that the Indian customers became to perform the services independently in future. Continued rendition of the support services also indicated absence of any such transfer of capability.
Conclusion: The receipts were not taxable as Fee for Included Services under Article 12(4)(b) of the India-USA Double Taxation Avoidance Agreement, and the issue was decided in favour of the assessee.
Issue (ii): Whether interest on refund under section 244A of the Income-tax Act, 1961 was to be computed up to the date of issuance of the refund voucher.
Analysis: The claim required verification of the assessee's contention regarding the terminal date for calculation of statutory interest. The matter was therefore directed to be examined by the Assessing Officer in accordance with law.
Conclusion: The claim was remitted for verification and recomputation in accordance with law.
Final Conclusion: The assessment additions were deleted on the principal taxability issue, while the refund-interest claim was sent back only for limited verification, resulting in a partial relief to the assessee.
Ratio Decidendi: For income to qualify as Fee for Included Services under the India-USA treaty, the revenue must establish that the service recipient was made able to apply the technical knowledge or skill independently, and mere provision of support services without such transfer does not satisfy the treaty test.
TaxTMI 
