9911796707
TMI Blog2024 (8) TMI 462X X X X Extracts X X X X X X X X Extracts X X X X ..... pting that subscription receipts from Cloud Services is not taxable as royalty. In case of Amazon Web Services Inc [ 2023 (8) TMI 331 - ITAT DELHI] the coordinate Bench of the Tribunal has also expressed identical view holding that subscription received from Cloud Services is not taxable as royalty. 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. Assessee appeal allowed. - Dr. B. R. R. Kumar, Accountant Member And Ms. Madhumita Roy, Judicial Member For the Assessee : Sh. Chavli Narayan, CA For the Revenue : Sh. Vijay B. Vasanta, CIT-DR ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: The present appeal has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant. 2.3 That the Ld AO and the Hon'ble DRP have erred on facts and in law in failing to appreciate that the Appellant's revenues are derived from the usage of copyrighted article, namely a computer program, and as such there is no transfer of any 'right to use of the copyright in such article, and therefore, the same cannot be constituted as royalty under the provisions of Article 12(3) of the India Ireland DTAA. 2.4 That the Ld. AO and the Hon'ble DRP have failed to appreciate that the ratio upheld by the Hon'ble Supreme Court in the lead case of Engineering Analysis Centre of Excellence Private Limited wherein, it was upheld that payment for grant of license for more usage of software does not amount to royalty, is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated under the laws of Ireland and a tax resident of Ireland. The assessee is stated to be engaged in the business of sale of software subscription in various countries including India. The assessee operates software as a Service (SaaS) business model, wherein, the customers are allowed to access the application software developed by the assessee from various devices through Cloud Computing Technology. The subscription receipts from Cloud Services permitted to customers was not offered to tax in India, as the assessee was of the view that they are not in the nature of royalty, but business receipts and in absence of PE in India, they are not taxable under India-Ireland Double Taxation Avoidance Agreement (DTAA). However, the Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpressed 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 Assessing Officer to delete the additions. Grounds are allowed. 7. In the result, appeals are allowed. 4. In the absence of any change in the factual matrix and the legal proposition, we hold that the appeal of the assessee is hereby allowed. 5. With regard to the issue of short grant of TDS, the AO is directed to grant the credit for taxes paid after due verification. 6. In the result ..... X X X X Extracts X X X X X X X X Extracts X X X X
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