Receipts from Software Sale to Indian Entities Not Taxable under India-Singapore DTAA: ITAT Delhi

Finastra International Financial Systems PTE Ltd. Vs ACIT (International Taxation) (ITAT Delhi)

Introduction: The case of Finastra International Financial Systems PTE Ltd. Vs ACIT (International Taxation) before the Income Tax Appellate Tribunal (ITAT) Delhi dealt with the taxation of receipts from the sale of software to Indian entities under the India-Singapore Double Taxation Avoidance Agreement (DTAA). The tribunal examined the contractual terms and concluded on the taxability of such receipts.

Detailed Analysis:

1. Background: Finastra International Financial Systems PTE Ltd., a Singapore-based entity, received income from the sale of software to Indian entities. The Assessing Officer treated these receipts as taxable under Section 9(1)(vi) of the Income Tax Act and Article 12(3) of the India-Singapore DTAA.

2. Grounds of Appeal: The assessee contested the AO’s assessment, arguing that the receipts did not constitute ‘royalty’ and should not be taxed. The appeal challenged various aspects of the AO’s decision, including the interpretation of contractual clauses and the applicability of judicial precedents.

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