Make available test limits taxation of software support, training and migration services absent transfer of usable technical know-how.

Under the India-Singapore DTAA, maintenance, support, troubleshooting, training and software migration services are taxable as fees for technical services only if they satisfy the "make available" test by transferring technical knowledge, skill, or know-how that the recipient can independently apply. On the stated facts, remote assistance and updates merely helped customers use and maintain the software, and no independently usable technical capability was passed on. The same reasoning applied to migration-related additional services, where no technical plan or know-how was shown to have been made available. In the absence of a permanent establishment in India, the receipts were characterised as business income not taxable in India on that basis.

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Issues: (i) Whether receipts from maintenance, support and training services were taxable as fees for technical services under Article 12(4)(b) of the India-Singapore DTAA and section 9(1)(vii) of the Income-tax Act, 1961. (ii) Whether receipts from software implementation and migration related additional services were taxable as fees for technical services, or as business receipts taxable in India in the absence of a permanent establishment.

Issue (i): Whether receipts from maintenance, support and training services were taxable as fees for technical services under Article 12(4)(b) of the India-Singapore DTAA and section 9(1)(vii) of the Income-tax Act, 1961.

Analysis: The services consisted of remote maintenance, support, troubleshooting, training and updates connected with the software sublicensed to Indian customers. The decisive question was whether the services satisfied the "make available" condition under Article 12(4)(b), namely whether technical knowledge, experience, skill or know-how was transferred so that the recipient could independently apply it. The recurring nature of the services, the absence of onsite support, and the nature of the assistance showed that the customers were only receiving help in using and maintaining the software, not acquiring technical capability to perform the services on their own.

Conclusion: The receipts from maintenance, support and training services were not fees for technical services and were not taxable in India on that basis.

Issue (ii): Whether receipts from software implementation and migration related additional services were taxable as fees for technical services, or as business receipts taxable in India in the absence of a permanent establishment.

Analysis: The additional services were confined to migration of software from an old version to a new version. No material was brought to show that any technical knowledge, know-how, skill or technical plan was made available to the Indian customers. The burden to prove satisfaction of the treaty's make available test lay on the Revenue and was not discharged. Once the receipts were not taxable as fees for technical services, they assumed the character of business receipts, and in the absence of a permanent establishment in India they could not be taxed in India.

Conclusion: The receipts from additional services were not taxable in India.

Final Conclusion: The additions treating the impugned service receipts as taxable income were deleted, and the assessee succeeded on the substantive issues, subject to dismissal of the non-pressed and consequential grounds.

Ratio Decidendi: For treaty purposes, technical or consultancy services are taxable as fees for technical services only when they satisfy the "make available" condition by transferring an independently usable technical capability to the recipient; mere maintenance, support, troubleshooting, training or software migration assistance does not meet that test absent such transfer.

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