2023 (9) TMI 1523 - AT - Income Tax

Taxability of income in India - taxability of subscription received from Cloud Services as royalty - HELD THAT - While considering identical issue in case of CIT vs. MOL Corporation 2023 (2) TMI 1177 - DELHI HIGH COURT has upheld the decision of the Tribunal holding that no substantial question of law arises out of the order of the Tribunal in accepting that subscription receipts from Cloud Services is not taxable as royalty. In case of Amazon Web Services Inc. 2023 (8) TMI 331 - ITAT DELHI has also expressed identical view holding that subscription received from Cloud Services is not taxable as royalty. Thus, in our view, the issue is squarely covered by the aforesaid decisions. Accordingly, we hold that the income received by the assessee from Cloud Services is not taxable in India, as they cannot be treated as royalty income. Accordingly, we direct the AO to delete the additions. Appeal of assessee allowed.

Summary

The Appellate Tribunal ITAT DELHI allowed the appeals filed by the assessee, challenging final assessment orders for assessment years 2019-20 and 2020-21. The issue was the taxability of subscription received from Cloud Services as royalty. The Tribunal held that the income from Cloud Services is not taxable in India as royalty income based on previous decisions. The Assessing Officer was directed to delete the additions. The appeals were allowed.