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Issues: Whether the consideration received by the assessee for provision of ancillary support services in connection with distribution of software licences qualifies as Fees for Technical Services (FTS) under Article 12 of the IndiaSingapore DTAA and is taxable in India.
Analysis: The Tribunal examined the contractual terms, the nature of services rendered, and the factual matrix, including maintenance and support clauses in the agreements. The assessee contended that the support services were ancillary and subsidiary to the sale of software and did not "make available" technical knowledge or skills; reliance was placed on precedents where maintenance/support did not satisfy the "make available" condition. The Revenue/DRP had treated the separately billed ancillary support services as FTS, observing continuous access, customisation liberty, and services to sensitive-operations clients as indicative of "making available". The Tribunal analysed the agreement clauses (including definitions of maintenance, provision of new releases/versions, and active support obligations) and found that the services constituted contractual obligations ancillary to the sale of software and maintenance of existing products rather than independent activities that "made available" technical knowledge enabling the customer to exploit the technology independently.
Conclusion: The Tribunal held that the AO/DRP's treatment was not justified and allowed the assessee's grounds challenging classification of the ancillary support services as FTS; accordingly, the impugned assessment on this issue is set aside in favour of the assessee. Ground relating to surcharge/cess was consequential and not adjudicated.
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