Software reseller receipts were not fee for technical services because no technical service was rendered and treaty "make available" was unmet.

Receipts from software-related transactions and reseller arrangements were not taxable as fee for technical services because the agreements granted only a limited, non-exclusive, non-transferable and non-sublicensable licence, with no right to modify software or part with copyright. The support functions were ancillary and the record did not show rendering of technical service within the Act. The treaty "make available" condition was also not met, so the assessee's treatment of the income as not chargeable to tax was upheld.

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Issues: Whether the receipts from software-related transactions and reseller arrangements were taxable as fee for technical services under the Income-tax Act, 1961 and the India-USA DTAA.

Analysis: The agreements showed that the assessee granted only a limited, non-exclusive, non-transferable and non-sublicensable licence to resellers, without any right to modify the software or part with copyright. The receipts were predominantly from reseller arrangements and the invoices described the amounts as consideration for bulk digital certificate purchase. The support functions were held to be ancillary, and the record did not establish that any technical service was rendered so as to bring the receipts within the ambit of fee for technical services. The requirement of "make available" under the treaty was also not satisfied.

Conclusion: The receipts were not taxable as fee for technical services, and the assessee's treatment of the income as not chargeable to tax was upheld.

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