The Delhi bench of the Income Tax Appellate Tribunal (ITAT) comprising Dr. B. R. R. Kumar, Accountant Member and Sh. Yogesh Kumar U.S., Judicial Member has held that the subscription to cloud base service cannot be treated as royalty as per the India USA Double Taxation Avoidance Agreement (DTAA).
The assessee, M/s MOL Corporation has contended that the department failed to appreciate functional aspect of cloud base service while holding subscription to cloud base service as royalty and the additions made by the Ld. A.O. Contrary to the India USA Double Taxation Avoidance Agreement. Nageshwar Rao, Adv and Sh. Akshay Uppal, Adv, the counsels appeared for the assessee has submitted that the similar issue has been dealt and decided in Assessee’s own case by the Co-ordinate Bench of the Tribunal in ITA No. 1554/Del/2016 vide order dated 13/04/2022.
The ITAT bench, after perusing all the documents, held that “the very same issue regarding the cloud service in assessee’s own case for the AY 2012- 13 came up for consideration before the Co-ordinate Bench of the Tribunal. The Co-ordinate Bench, by following the ratio laid down in the case of M/s. Salesforce.com Singapore Pte. Vs. Dy. D.I.T. Circled-2(2) ITA No. 4915/Del/2016 [A.Y 2010-11] and also the decision of Mumbai Tribunal in the case of DDIT Vs. Savvis Communication Corporation [2016] 69 Taxman.com 106 (Mumbai- Trib.) and the Chennai Tribunal decision in the case of ACIT Vs/. Vishwak Solutions Pvt. Ltd. ITA No. 1935 & 1936/MDS/2010 dated 30/01/2015, held that the authorities fallen in error in considering the subscription received towards cloud serviced to be royalty income.”
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