Outsytems Singapore Pte. Ltd. Vs DCIT (ITAT Delhi)
The appeal was filed by the assessee against the assessment order passed under Section 143(3) read with Section 144C(13) of the Income-tax Act, 1961 for Assessment Year 2022-23. The assessee raised thirteen grounds of appeal. Ground No. 4, challenging the validity of the assessment order for absence of a Document Identification Number (DIN), was not pressed and was dismissed accordingly.
Ground No. 3 challenged the validity of the final assessment order on the basis that it had been manually signed by the Assessing Officer despite the assessment having been completed through the e-Proceedings system. The assessee relied on CBDT Instruction No. 01/2018 dated 12.02.2018, which mandates that all departmental orders, communications, and notices issued through the e-Proceeding facility must be digitally signed by the Assessing Officer. The assessee contended that manual signing rendered the assessment order invalid.
On merits, the assessee challenged the treatment of software licence fees and services amounting to Rs. 32,52,03,349 as Fees for Technical Services (FTS). The assessee, a Singapore tax resident without a Permanent Establishment in India under Article 5 of the India-Singapore Double Taxation Avoidance Agreement (DTAA), acted as the master distributor of software and services in the Asia Pacific region for Outsystems Software em Rede, SA, Portugal. The software was licensed to customers under Master Subscription Agreements or End User Licence Agreements. The assessee filed its return declaring nil taxable income, claiming the software licensing income was exempt. The Assessing Officer treated the receipts as FTS, and the Dispute Resolution Panel affirmed that view, following which the final assessment order was passed.
