The Delhi bench of Income Tax Appellate Tribunal ( ITAT ) ruled that receipts from software subscription payments training and professional fees was not taxable in India as Fee For Technical Service( FTS ) under India-Netherlands Double Taxation Avoidance Agreements( DTAA ).
The assessee Service Now Nederland BV, after filing the return of Income the case was selected for scrutiny for refund claim. The assessee had claimed INR 171,92,37,658/- as exempt from taxation under Article 12 of India-Netherlands DTAA.
The AO in order to satisfy the veracity of claim of the assessee issued notice to the assessee to explain about its claim. Rejecting the claim of the assessee, the AO taxed INR 171,92,37,658/- as FTS under DTAA.
Subsequently The assessee filed objections against the action of the AO before the DRP objecting draft order passed u/s 144C(1) of the Act. DRP considered the objections and held that there was no reason to deviate from the finding of the DRP for A.Y. 2019-20, whereby the learned DRP had upheld that the receipts from subscription payments, training and professional fees were taxable in India as FTS.
Aggrieved, the assessee filed an appeal before the tribunal.
Assesee representative ,Aditya Vohra argued that the issue is squarely covered by the decision of the Tribunal in assessee’s own case for A.Y. 2019-20 .
Vizay B. Vasanta, the Department representative, supported the assessment order and contended that the DRP has examined the issue.
The tribunal observed that the assessee had merely granted only access to software and there was no transfer of technology by the assessee. Hence the services rendered by the assessee does not fall within the definition of FTS as per the Treaty.
The two-member bench of Dr. B.R.R. Kumar ( Accountant member ) and Kul Bharat, ( Judicial Member ) held that, professional and training services rendered by the assessee does not fall within the definition of FTS both under the Income Tax Act as well as under the DTAA .
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