Cloud service subscription receipts were held not to be royalty income in India, and the additions were deleted.

Subscription receipts for access to software through cloud-based services were treated as not constituting royalty income under earlier ITAT Delhi decisions, so the resulting tax additions were not sustainable and were deleted in favour of the assessee. The analysis turns on the character of the cloud service payments as access receipts rather than royalty, with the stated effect that such receipts were not taxable in India as royalty income.

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Issues: Whether subscription receipts from Cloud Services were taxable in India as royalty income.

Analysis: The assessee received subscription receipts for access to software through cloud-based services. The issue was treated as covered by earlier decisions holding that such receipts do not constitute royalty. The additions were therefore not sustainable.

Conclusion: The subscription receipts from Cloud Services were not taxable as royalty income in India and the additions were deleted in favour of the assessee.

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