IN THE INCOME TAX APPELLATE TRIBUNAL “I” BENCH, MUMBAI BEFORE MS PADMAVATHY S, AM &

SHRI RAJ KUMAR CHAUHAN, JM I.T.A. No. 1453/Mum/2025 (Assessment Year: 2014-15)

DCIT (IT)-3(2)(2), M u r e x Southeast Asia Pvt. Ltd., Room No. 614, 6^th Floor, 10, Marina Bay Financial Centre, Kautilya Bhavan, BKC, Vs. Tower-2, Marina Boulevard, 19-01, Bandra (East), Mumbai-400051. Singapore, Maharashtra-400051.

PAN: AAICM4006F Appellant) : Respondent Appellant /Assessee by : Shri Ajit Jain / Ms. Shreya Sejpal, AR Revenue / Respondent by : Shri Satya Pal Kumar, Sr. DR Date of Hearing : 25.06.2025 Date of Pronouncement : 30.06.2025 O R D E R Per Padmavathy S, AM:

This appeal by the Revenue is against the order of Commissioner of Income Tax (Appeals)-57 Mumbai [In short 'CIT(A)'] passed under section 250 of the Income Tax Act, 1961 (the Act) dated 30.12.2024 for Assessment Year (AY) 2014-

15. The assessee raised the following grounds of appeal:

“(1) Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in holding the penalty u/s.271(1)(c) of the Act in this case was imposed on debatable issues on which two views are possible without considering the fact that the Department has consistently taking a stand that the nature of receipt of the assessee are taxable income and the assessee has furnished inaccurate particulars of income by not declaring such income.

(2) Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in holding the assessee had duly disclosed all the relevant facts and taken one of the permissible views based on certain legal decisions, it cannot be said that it is a case of furnishing of inaccurate particulars of income?

(3) Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in holding that it is necessary for the Assessing Officer to indicate broadly the limb under which penalty proceedings were triggered against the assessee and that the same has not happened in this case?”

2. The assessee is a company incorporated in Singapore and engaged in the business of sub-licensing software to entities in financial sector and providing related maintenance other support and training services with respective such software sub-licensed by its. The assessee holds valid Tax Residency Certificate (TRC) obtained from the authorities in Singapore. During the year under consideration the assessee had receipts to the tune of Rs. 31,33,15,305/- from sub- licensing software and providing maintenance and training services. The assessee claimed the said receipts from sub-licensing software as not taxable since the same does not tantamount to Royalty as per Article 12 of India-Singapore DTAA. The assessee further claimed that the receipts towards maintenance and training services to Indian customers as not taxable as Fees for Technical Services (FTS) as par Article 12 of India-Singapore DTAA as the services does not "make available" any technical knowledge, experience, skill, know-how or process. The assessee also claimed that since there is no Permanent Establishment (PE) in India under Article 5 of India-Singapore DTAA the business profits are not taxable in India. Accordingly the assessee filed the return of income for AY 2014-15 on 30.09.2015 declaring Nil income. The case was selected for scrutiny. The Assessing Officer (AO) passed a draft assessment order holding that the impugned receipts are taxable in India by treating the income from Software Sub-licensing as "Royalty" and income from Maintenance and Training Services as FTS. The assessee filed further objections before the DRP who confirmed the addition made by the AO and the AO passed the final assessment order pursuant to the directions of the DRP. In the final assessment order, the AO has stated that penalty proceedings under section 271(1)(c) is initiated for furnishing of incorrect particulars of income. Subsequently, the AO issued a notice under section 271(1)(c) initiating the penalty proceeding