Software licence receipts and make available test: GIT infrastructure charges not taxable as fees for included services or royalty.

Receipts from GIT infrastructure charges for use of third-party software were treated as consideration for a copyrighted article, not as a transfer of technical knowledge, skill, know-how or process to the Indian group entities. Applying the make available requirement under Article 12(4)(b) of the India-Canada DTAA, the arrangement did not enable the recipient to perform the function independently without further recourse to the assessee. No copyright or commercial exploitation right was granted, so the receipts were not taxable as Fees for Included Services or royalty under the Income-tax Act, 1961 or the DTAA, and the addition was deleted.

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Issues: Whether the receipts from GIT infrastructure charges for use of third-party software were taxable as Fees for Included Services or royalty under the Income-tax Act, 1961 and Article 12 of the India-Canada DTAA.

Analysis: The receipts arose from use of software licensed from third-party vendors and not from any transfer of technical knowledge, skill, know-how, or process to the Indian group entities. Applying the make available requirement under Article 12(4)(b), the services did not enable the recipient to perform the function independently without recourse to the assessee. The payment was for a copyrighted article and no copyright or commercial exploitation right was granted. The facts were held to be identical to the assessee's earlier year, where the coordinate bench had deleted a similar addition.

Conclusion: The amount received as GIT infrastructure charges was not taxable as Fees for Included Services or royalty, and the addition was deleted in favour of the assessee.

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