TaxTMI 
TaxTMI 
TaxTMI 
2026 (1) TMI 1370
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.... Determining the total income of the Appellant at INR 482,776,315/- b) Determining a tax payable of INR 52,719,174; c) Consequential levy of interest of INR 6,589,897; and d) Raising a demand of INR 53,391,100 upon the Appellant. 3. Erroneous treatment of the consideration received from provision of ancillary support services in connection with the distribution of software licenses as Fee for Technical Services ('FTS') taxable in India 3.1 The Ld. AO and the Hon'ble DRP have erred in holding that consideration received by the Appellant from provision of ancillary support services in connection with the distribution of software licenses would qualify as 'FTS' under Article 12 of the Double Taxation Avoidance Agreement ('DTAA') between India and Singapore, and is therefore subject to tax. 3.2 The Ld. AO and the Hon'ble DRP have erred in holding that the services provided by the Appellant 'make available' technical knowledge, skills, etc. on the basis of incorrect understanding of the facts of Appellant's case. 3.3 The Ld. AO and the Hon'ble DRP grossly erred in concluding th....
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.... they have been reported correctly. 3.1 Further notices u/s 143(2) dated 31/05/2023 was issued and duly served on the assessee followed by notices u/s 142(1) on various recorded dates through the compliance portal of the Income Tax Department. The Assessee is engaged in the business of distribution of computer software products related services and specialised services. During the previous year relevant to AY 2022-23, the Assessee has received a sum of Rs 132,84,52,313 from its operations which include the above from India. As per the ROI filed by the Assessee, it is the wholly owned subsidiary of Computer Associates (Luxembourg) SARL with the ultimate owner being Broadcom INC USA. For the purpose of taxation in India, the Assessee is covered by the India-Singapore DTAA and the relevant sections of the Income Tax Act pertaining to residence, scope of total income and sections 90 and 91 as they are applicable. Further, Assessee was requested to provide a breakup of the aforementioned receipts from India, which was furnished vide reply dated 05/10/2023. The Assessee furnished a table giving the heads under which the above amount was received, which is reproduced below: Sl. No ....
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....e previous year relevant to A.Y. 2022-23 they have been billed separately and do not show any linkages to they being ancillary of subsidiary to any product sold to the entities who have availed these services. In fact, during the course of the proceedings and while examining the Assessee's grievance redressal mechanism with regard to services provided it was noticed that most of the grievances raised pertained to Financial Institutions er Government Institutions and the National Payment Corporation of India (NPCI). This is indicative of the fact that the services provided by the Assessee are in the nature of Make available as these organisations and the type of environment they operate in which includes handling sensitive data would be of any other mode than making available the services to these subscribers. These services, therefore, are not ancillary to & subsidiary to the sale of products covered under EULA agreement executed by the Assessee with various parties. They are offered to the customer with liberty to customize it based on the environment in which it is operating. The services are made available to the subscribers by continuous access and support and these are hig....
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.... the services have a liberty to customer to customize the software licenses. The Ld. AR further submitted that the Assessing Officer erred in holding that provision of ancillary support services does not qualify as "ancillary and subsidiary" as covered in Article 12(5) of the DTAA. The Ld. AR further submitted that the decision rendered by the jurisdictional Mumbai Bench of the ITAT in the case of Murex Southeast Asia Pvt. Ltd. v. DCIT (Mum) [TS-266-ITAT-2023(Mum)) and Assistant Commissioner of Income-tax (International Taxation) v. Juniper Networks International B.V. [2023] 154 taxmann.com 563 (Mumbai Trib.), which held that make available condition was not satisfied in case of software maintenance. 10. The Ld. DR relied upon the directions of the DRP more specifically para 6.3 at page 20. 11. We have heard both the parties and perused the materials available on record. The treatment of consideration received from the provision of ancillary support services in connection with distribution of software licences as fee for technical services taxable in India by the Assessee was that of not agreed upon by the TPO/A.O. as the TPO/A.O. observed that of note nature of receipt from ....