TaxTMI 
TaxTMI 
2022 (6) TMI 881
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....passed pursuant to the directions of the Transfer Pricing Officer (TPO) for respective assessment years. 2. Since issues are common and the appeals were heard together, these are being disposed off by this common order. 3. For the sake of reference, we are referring facts of appeal in ITA No. 7855/Del/2019 for Assessment Year 2015-16. 4. The grounds of appeal taken by the assessee read as under:- Grounds "1. That on the facts and in the circumstances of the case and in law, the Deputy Commissioner of Income Tax, Circle - 2(2)(1). International Taxation. Delhi ('Ld. AO') has erred in computing the total income of the Appellant at INR 1632,49,90,405 as against NIL income reported in the return of income by t....
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....f business income not taxable under Article 7 of India - USA DTAA in the absence or a Permanent Establishment of the Appellant in India. 4.3 That on the facts and in the circumstances of the case and in law. the Ld. DRP and the Ld. AO have erred in law in disregarding decisions of Hon'ble Courts and routinely holding to the contrary. 4.4 Ld. DR and Ld. AO erred in failing to appreciate that receipts by MRS of INR 14,57,54,90,041 is not taxable as 'Royalty' or 'otherwise' in the hands of Appellant, under the Act or India - USA DTAA. 5. Taxability of consideration from cloud services 5.1 That on the facts and in the circumstances of the case and in law. the Ld. DRP and the Ld. AO have er....
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....he issues are so covered. 7. We have carefully considered the submissions and perused the records. Brief facts of the case are that the assessee company, MOL Corporation is a company incorporated in the United States of America having its registered office at C/o. Corporation Services Company, 2215-B, Renaissance Drive, Las Vegas, Nevada 89119, USA. Microsoft Corporation, USA is the ultimate parent entity of the assessee. Assessee is a tax resident of USA and therefore, it is entitled to claim the applicability of beneficial provisions of the Double Taxation Avoidance Agreement entered into between India and US (India - US tax treaty) vis-à-vis. the provisions of the Income-tax Act, 1961 (for short 'the Act'). The AO/TPO m....
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....21 in Engineering Analysis Centre of Excellence (P) Ltd. vs. Commissioner of Income Tax (2021) 125 taxmann.com 42 (SC) has upheld the Hon'ble Delhi High Court judgment. It was submitted that in the case of Gracemac Corporation which stands amalgamated with MOL Corporation for the assessment year 2005-06, 2006-07 and 2007-08 the Co-ordinate Bench B at Delhi by order dated 16.12.2020 has allowed the appeals which have been further upheld by Hon'ble Delhi High Court by judgment dated 07.03.2022. The Ld. DR supported the findings of Tax authorities below. 6.1 Giving thoughtful consideration to the matter on record, the Bench is of considered opinion that the revenue has been following a persistent approach in regard to assessee....
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....aspects of Cloud base service while holding the subscription to cloud base service as royalty. In this context, the co-ordinate bench judgment in M/s. Salesforce.com Singapore Pte. Vs. Dy. D.I.T. Circle-2(2) ITA No. 4915/DEL/2016 [A.Y. 2010-11] with six other connected was relied to contend that subscription to the cloud computing services do not give rise royalty income. The Ld. DR supported the findings of Tax authorities below. 7.1 Giving thoughtful consideration to the matter on record, the bench is of considered view that the cloud base services do not involve any transfer of rights to the customers in any process. The grant of right to install and use the software included with the subscription does not include providing any ....
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....quipments and machines relating to the service provided by the assessee are under its control and are outside India and the subscribers do not have any physical access to the equipment providing system service which means that the subscribers are only using the services provided by the assessee." 7.3 The Mumbai Tribunal in the case of DDIT v. Sawis Communication Corporation [2016] 69 taxmann.com 106 (Mumbai-Trib.) has held that payment received for providing web hosting services though involving use of certain scientific equipment cannot be treated as 'consideration for use of, or right to use of, scientific equipment' which is a sine qua non for taxability under section 9(1)(vi), read with Explanation 2(iva) thereto as als....