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Maintenance Charges are in the nature of reimbursement charges paid to the parent company for using software related issues and cannot be held as payment of fee for Technical Services and hence the TDS is not applicable. The Ld.AR relied on the decision of ITAT, Chennai, in the case of Cairn Energy Pvt. Ltd., reported in (2010) 2 ITR 38.

11.1 Similarly, in the case of Testing and Development Charges, the Ld.AR argued that the assessee is using the output of technology without human intervention. For holding the payment as Fee for Technical Services(FTS) the element of human intervention is necessary. whereas in the assesse's case both for server maintenance and testing and development charges there is no human involvement and thus the payment cannot be held as Fee for technical services.

16.4 The argument of the assessee is not acceptable since the Fee For Technical services are covered by Article-13 of the DTAA (and not by article -7) which reads as under:

ARTICLE 13 ROYALTIES AND FEES FOR TECHNICAL SERVICES

1. Royalties and fees for technical services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

2. However, such royalties and fees for technical services may also be taxed in the Contracting State in which they arise and according to the laws of that State, but if the recipient is the beneficial owner of the royalties, or fees for technical services, the tax so charged shall not exceed 20 per cent of the gross amount of the royalties or fees for technical services.

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4. The term "fees for technical services" as used in this Article means payments of any amount to any person other than payments to an employee of the person making payments, in consideration for the services of a managerial, technical or consultancy nature, including the provisions of services of technical or other personnel.

5. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties or fees for technical services, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties or fees for technical services arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right, property or contract in respect of which the royalties or fees for technical services are paid is effectively connected with such permanent establishment or fixed base. In such a case, the royalties or fees for technical services shall be taxable in that other Contracting State according to its own law.

6. Royalties and fees for technical services shall be deemed to arise in a Contracting State when the payer is that State itself, a political or administrative sub-division, a local authority or a resident of that State. Where, however, the person paying the royalties or fees for technical services, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the liability to pay the royalties or fees for technical services was incurred, and such royalties or fees for technical services are borne by such permanent establishment or fixed base, then such royalties or fees for technical services shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.