- Payments for web-hosting services are
in the nature of business income.
- Payments do not constitute royalties
for "use of industrial, commercial or scientific
equipment".
- No withholding tax applicable.
Recently, the Pune Bench of the Income Appellate Tax Tribunal
("Tribunal") ruled that payments
("Payments") for web hosting services
("Services") are not in the nature of
royalties. The Tribunal held that the Payments are is in the nature
of business income and in the absence of a permanent establishment
("PE") of the non-resident payee in
India, the Payments would not be subject to a withholding tax in
India.
Background
The payee, Amazon Web Services LLC
("AWS") is a company incorporated in the
USA and is a subsidiary of Seattle headquartered Amazon.com Inc. It
provides on-demand cloud computing services to individuals,
companies and governments, on a paid subscription basis. The payer,
EPRSS Prepaid Recharge Services India Private Limited
("ESIPL" or
