Ancillary support services linked to software licensing were not treated as technical fees; separate invoices did not change their character.

Receipts from ancillary support services linked to software licence distribution were not treated as Fees for Technical Services under the India-Singapore DTAA or the Income-tax Act. Although the services were separately invoiced, the agreement and surrounding terms showed that they formed part of the support and maintenance framework attached to the software licence arrangement. On the facts, the separate billing did not establish independent technical services, and the record did not support a finding that technical knowledge or skills were made available. The addition was deleted, and the receipts were held taxable as part of the software licence activity rather than as stand-alone FTS.

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Issues: Whether consideration received for ancillary support services connected with software licence distribution was taxable as Fees for Technical Services under the India-Singapore DTAA and the Income-tax Act.

Analysis: The services were separately billed, but the agreement and surrounding terms showed that they were part of the support and maintenance framework attached to the software licence arrangement. The record did not justify the conclusion that the receipts were independent technical services merely because they were invoiced separately. The reasoning that the services made available technical knowledge or skills was not accepted on the facts, and the services were treated as ancillary to the software licence activity rather than as stand-alone technical services.

Conclusion: The addition treating the ancillary support-service receipts as taxable FTS was deleted and the issue was decided in favour of the assessee.

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