The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has granted interim relief to Amazon Web Services (AWS) by staying recovery of Rs 549 Crores towards addition of income from cloud computing services.
The assessee, Amazon Web Services is a Tax Resident of the United States of America (USA) and was engaged in the business of providing Cloud Computing Services to customers around the world. Based on proceedings under Section 201/201(1A) of the Income Tax Act 1961 conducted in case of Snapdeal to verify TDS compliance.
The assessment proceedings under Section 147 of the Act were initiated against the assessee and while completing the assessments, the Assessing Officer held that the receipts of the assessee from Cloud Computing Services were in the nature of Royalty and Fee for Technical Services (FTS)/Fee for Included Services (FIS), and was chargeable to tax in India.
Ajay Vohra, who appeared for the assessee contended that the assessment orders were invalid and receipts could not be treated as Royalty/FTS. Further, he submitted, the Assessing Officer has made computational error by imposing higher tax rate as per domestic law instead of the tax rates applicable under the relevant tax treaties.
He also submitted that the rectification applications had been pending before the Assessing Officer.
Sanjay Kumar, who appeared for the revenue Strongly opposed granting of absolute stay, and submitted that the assessee should be directed to pay 20% of the outstanding demands.
The Division Bench of Saktijit Dey, (Judicial Member) and B.R.R Kumar, (Accountant Member) stayed the recovery of the balance outstanding demand for a period of 180 days on certain conditions.
The assessee was directed to pay 10% of the outstanding demand for both the assessment years under dispute on or before 31.03.2023 and the assessee had to furnish bank guarantee so as to cover further 10% of the outstanding demand. The bank guarantee must be furnished before the Assessing Officer on or before 30.04.2023.
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