TEMENOS HEADQUARTERS SA,CHENNAI vs. ASSISTANT COMMISSIONER OF INCOME TAX, CHENNAI

ITA 558/CHNY/2025Status: DisposedITAT Chennai28 August 2025AY 2022-23Bench: SHRI GEORGE GEORGE K (Vice President), SHRI S.R. RAGHUNATHA (Accountant Member)7 pages
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What did the Tribunal hold?

The Income Tax Appellate Tribunal (ITAT) followed its own previous decisions in the assessee's own case for earlier assessment years, holding that annual maintenance service fees are an integral part of software license sales and not taxable as FTS. The Tribunal concluded that the amount received is not taxable in India as it cannot be treated as 'Fees for Included Services' under Article 12(4) of the DTAA, and directed the AO to delete the addition. The related stay petition was dismissed as infructuous.

What were the facts?

M/s. Temenos Headquarters SA, a Swiss company, received Rs. 11,11,70,515/- as annual recurring license fees for banking software, which the Assessing Officer (AO) treated as 'Fees for Technical Services' (FTS) under the Income Tax Act and Article 12 of the India-Switzerland DTAA, taxing it at 10%. The assessee challenged this, arguing that these charges are an integral part of software license sales and not FTS. The DRP upheld the AO's draft assessment order.

What were the issues?

Whether annual software maintenance charges received by a non-resident company are taxable as 'Fees for Technical Services' under the Income Tax Act, 1961, and Article 12 of the India-Switzerland DTAA.

Which sections of the Income-tax Act were involved?

Section 143(2),Section 142(1),Section 143(3),Section 144C(1),Section 144C(5),Section 144C(13),Section 9(1)(vii)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI

Before: SHRI GEORGE GEORGE K & SHRI S.R. RAGHUNATHA

For Respondent: Ms. Sita Krisnamoorthy, JCIT
Hearing: 11.06.2025Pronounced: 28.08.2025

PER S. R. RAGHUNATHA, AM :

These appeals filed by the assessee are directed against the order passed by the learned Commissioner of The Assistant Commissioner of Income Tax, International Taxation Circle 2(2), Chennai dated 13.01.2025 and pertains to assessment

The order continues below.

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