Delhi ITAT holds that cloud computing services provided by Amazon Web Services, Inc. (Assessee) is not taxable as Fee for Included Services (FIS) under Article 12(4)(b) of India-US DTAA as 'make available clause' is not satisfied; Rejects Revenue's submission that by providing support and troubleshooting etc., the Assessee is providing technical services to its customers and holds that "in our considered view, these are the general /incidental support services provided by the assessee to its customers and does not involve any transfer of technology or knowledge but only enables them to effectively access the AWS Services in an appropriate and efficient manner"; Also denies taxability of cloud computing services as royalty under Article 12(3) of the India-US DTAA;
Assessee, a US-based Company, engaged in providing ‘standard and automated’ cloud computing services/AWS services was subject to reassessment proceedings, for AYs 2014-15 and 2016-17 whereby the Assessee submitted that it received Rs.247.68 Cr. and Rs.1,007.81 Cr, respectively, from its customers in India for providing standard and automated cloud computing services;
The revenue held the entire receipts to be taxable in India as FIS/FTS and royalty; On FIS/FTS, ITAT reiterates the principle that for taxability, the services should ‘make available’ the technical knowledge, experience, skill, know-how or processes, which enables the service recipient to utilize the same in future on its own without the help of service provider;
Relies on jurisdictional HC ruling in Sheraton International, Ahmedabad ITAT ruling in Veeda Clinical Research, and Madras HC ruling in Van Oord; Further relies on Pune ITAT ruling in Sunguard and Mumbai ITAT ruling in Rackspace, wherein it was held that rendering cloud computing service cannot be held to be liable to tax in India as FTS/FIS;
Also relies on the Madras HC ruling in Skycell apart from SC rulings in Kotak Securities and A.P. Moller Maersk to hold that the use of standard facility does not amount to providing technical services, as technical services denote services catering to the special needs of the person using them and not a facility provided to all; : ITAT DEL
The ruling was delivered by the Division Bench of Delhi ITAT comprising Shri G.S. Pannu, President, and Ms. Astha Chandra, Judicial Member.
Senior Advocate Porus Kaka along with Advocates Manish Kanth, Deepashree Rao, and Hardeep Singh Chawla appeared for the Assessee while the Revenue was represented by Mr. Vizay B. Vasanta, CIT-DR.
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