Related Services Income Not FTS If Software Sale Not Royalty | ITAT

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Related Services Income Not FTS If Software Sale Not Royalty

Case Details: Veritas Storage (Singapore) Ptd. Ltd. vs. Deputy Commissioner of Income-tax - [2026] 182 taxmann.com 149 (Delhi - Trib.)

Judiciary and Counsel Details

  • Vikas Awasthy, Judicial Member
  •  Krinwant Sahay, Accountant Member
  • Tarun Gulati, Sr. Adv., Nikhil Gupta & Prince Nagpal, Advs. for the Appellant.
  • M.S. Nethrapal, CIT-DR for the Respondent.

Facts of the Case

The assessee company, incorporated under the laws of Singapore, was engaged in the sale of software. It provided maintenance support, other services, education and training services in connection with the software’s utilisation. The assessee received consideration for the same. The Assessing Officer (AO) treated the income earned by the assessee from maintenance support and education and training services as fees for technical services (FTS).

On appeal, the CIT(A) deleted the additions made by the AO. Aggrieved by the order, an appeal was filed to the Delhi Tribunal.
The Tribunal held that maintenance support and other services, as well as education and training services, are intricately and inextricably associated with the Software sold and are provided in connection with the software’s utilisation as per Article 5(a) of the Indo-Singapore DTAA.

Further, the revenue itself has accepted that the sale of software is not taxable as Royalty. When the income from the sale of the software is not taxable, income from the sale of related and inextricably linked services cannot be held as FTS.

ITAT Held

Maintenance support and other services; Education and training services are not taxable as FTS. The said transactions do not satisfy the ‘make available’ clause as per Article 12(4)(b) of the India-Singapore DTAA. Burden is on the revenue to demonstrate that the make available condition is satisfied. Neither the Assessing Officer nor the revenue could bring any evidence on record to substantiate that the ‘make available’ condition is satisfied in the case of the assessee.

Accordingly, the Assessing Officer was directed to delete the said addition.

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied