- CIT Amazon Web Services Inc. (Supreme Court of India)
- Core Issue: Taxability of AWS Cloud-Computing Receipts
- Facts: AWS Cloud Services Provided to Indian Customers
- AO Finding: Cloud Receipts Treated as Royalty and FIS
- ITAT Finding: Limited Access to Standard Cloud Services
- Delhi High Court Finding: AWS Receipts Not Royalty
- No Transfer of Equipment or Commercial Exploitation Rights
- FTS/FIS Finding: Technical Support Did Not “Make Available” Technology
- Key Legal Proposition
- Final High Court Decision
- Supreme Court Decision: SLPs Dismissed
CIT Amazon Web Services Inc. (Supreme Court of India)
Summary: The Supreme Court dismissed the Revenue’s SLPs against the Delhi High Court judgment concerning cloud-computing receipts earned by Amazon Web Services Inc. from Indian customers, leaving undisturbed the finding that such receipts were neither royalty under section 9(1)(vi) of the Income-tax Act, 1961/Article 12(3) of the India-US DTAA nor fees for technical services/fees for included services (FTS/FIS) under section 9(1)(vii)/Article 12(4). The courts held that customers of AWS received only limited, non-exclusive and non-transferable access to standardised, automated cloud services and did not obtain the use or right to use scientific equipment, as AWS retained ownership, control and operation of its infrastructure. The Revenue’s “make available” argument was also rejected because technical support, troubleshooting and configuration assistance did not transfer technical knowledge, skill, know-how or processes enabling customers to independently apply the technology. On 04.08.2026, the Supreme Court dismissed SLP (C) Nos. 17045/2026 and 21151/2026, observing that no case was made out for interference with the Delhi High Court’s judgment. Accordingly, the Delhi High Court ruling in favour of AWS remains undisturbed.
Core Issue: Taxability of AWS Cloud-Computing Receipts
Whether consideration received by Amazon Web Services, Inc., a US tax resident, from Indian customers for standardised cloud-computing services is taxable in India as “royalty” under section 9(1)(vi)/Article 12(3) of the India-US DTAA or as fees for technical services/fees for included services (FTS/FIS) under section 9(1)(vii)/Article 12(4), particularly on the Revenue’s contention that customers obtained a right to use scientific equipment and that technical knowledge was “made available”.
Facts: AWS Cloud Services Provided to Indian Customers
Amazon Web Services Inc. provided standardised and automated cloud-computing services to Indian customers under standard electronic agreements. The Revenue received information regarding foreign remittances by Snapdeal towards hosting and bandwidth charges without withholding tax under section 195. Reassessment proceedings were initiated for AYs 2014-15 and 2016-17.
The AO treated the receipts as taxable royalty and FIS, contending that AWS provided access to hardware/infrastructure comprising servers, software, storage, networking equipment and databases, besides technical support and AWS content/API facilities.
The assessee contended that customers merely accessed automated cloud services; no copyright, source code, equipment, technology, know-how or commercial exploitation rights were transferred.
AO Finding: Cloud Receipts Treated as Royalty and FIS
The AO held that AWS receipts were taxable as royalty because the customers were allegedly given the right to use scientific equipment/infrastructure and intellectual property; he also treated the receipts as FTS/FIS, holding that AWS provided technical support and made technology available to customers.
The AO therefore assessed substantial income for AY 2014-15 and AY 2016-17 as taxable in India.
ITAT Finding: Limited Access to Standard Cloud Services
The ITAT examined the customer agreement, AWS content, licensing provisions and support guidelines and held that the customers received only a limited, non-exclusive and non-transferable licence/access to standard automated cloud services.
They received neither source code nor any right to commercially exploit AWS’s IPR, and no AWS equipment was placed at their disposal.
The Tribunal further held that AWS did not transfer or make available technical knowledge, skill, know-how or processes; support services merely enabled customers to use the cloud platform.
Accordingly, receipts were held neither royalty nor FIS under the Act/India-US DTAA.
Delhi High Court Finding: AWS Receipts Not Royalty
The High Court upheld the ITAT. It held that “use” or “right to use” in Article 12(3) of the India-US DTAA must receive a narrow interpretation.
Customers merely accessed AWS’s standardised cloud infrastructure; they neither controlled nor commercially exploited the underlying hardware/software, and no equipment was placed exclusively at their disposal.
AWS itself used its proprietary infrastructure to provide services. Therefore, payment for services rendered through AWS’s equipment could not be treated as payment for use/right to use scientific equipment and hence was not royalty.
No Transfer of Equipment or Commercial Exploitation Rights
The customers did not acquire ownership, possession, control or commercial exploitation rights over AWS’s infrastructure. Their rights were confined to accessing and using the standardised cloud-computing services provided by AWS.
FTS/FIS Finding: Technical Support Did Not “Make Available” Technology
The Court also rejected the Revenue’s “make available” argument.
Merely providing technical assistance, troubleshooting, configuration guidance or support does not mean that AWS transferred technical knowledge, skill, know-how or processes enabling the customer to independently apply the technology.
The support was incidental to availing the cloud services and did not satisfy Article 12(4)(b) of the India-US DTAA.
Key Legal Proposition
A cloud-service customer’s access to computing infrastructure is not equivalent to acquiring the “use” or “right to use” scientific equipment for royalty purposes where the provider retains control, ownership and operation of the infrastructure.
Likewise, technical assistance does not constitute FIS unless the provider makes available technical knowledge, experience, skill, know-how or processes enabling the recipient to apply the technology independently.
Final High Court Decision
The Delhi High Court held that the cloud-computing receipts were neither royalty nor FTS/FIS under the Act or India-US DTAA and were therefore not taxable in India in the absence of a PE/business-income basis; no substantial question of law arose and the Revenue’s appeals were dismissed.
Supreme Court Decision: SLPs Dismissed
The Revenue challenged the Delhi High Court judgment through SLP (C) Nos. 17045/2026 and 21151/2026.
On 04.08.2026, the Supreme Court held that no case was made out for interference with the High Court’s judgment and dismissed both SLPs.
Thus, the Delhi High Court ruling in favour of AWS remains undisturbed.
Read Also Delhi HC Judgment in this case: AWS Cloud Computing Service Receipt Not Taxable as Equipment Royalty: Delhi HC
Cases Discussed
- Commissioner of Income-tax, International Taxation v. Urban Ladder Home Decor Solutions (P.) Ltd. (Karnataka High Court), [2025] 171 com549 (Karnataka)
- CIT (International Taxation) Vs. Salesforce.com Singapore Pte. Ltd. (Delhi High Court), (2024) 465 ITR 257
- Commissioner of Income Tax (International Taxation) v. MOL Corporation (Delhi High Court), [2024] 162 com197 (Delhi)
- Commissioner of Income-tax (International Taxation) v. Telstra Singapore Pte. Ltd. (Delhi High Court), (2024) 467 ITR 302
- CIT v. Relx Inc. (Delhi High Court), (2024) 3 HCC (Del) 229 : (2024) 470 ITR 611
- Engineering Analysis Centre of Excellence (P.) Ltd. v. CIT & Anr. (Supreme Court), (2021) 432 ITR 471
- CIT -Vs.-ZTE Corporation (Delhi High Court), (2017) 392 ITR 80
- Director of Income Tax v. New Skies Satellite BV & Anr. (Delhi High Court), (2016) 382 ITR 114
- Director of Income Tax -Vs.-Infrasoft Ltd. (Delhi High Court), (2014) 264 CTR 329
- Director of Income Tax -Vs.- Nokia Networks OY (Delhi High Court), (2013) 358 ITR 259
- Director of Income Tax -Vs.- Ericsson A.B. (Delhi High Court), (2012) 343 ITR 470
- Asia Satellite Telecommunications Co. Ltd. v. Director of Income-tax (Delhi High Court), (2011) 332 ITR 340
- CIT v. Synopsis International Old Ltd. (Karnataka High Court), 2010 SCC OnLine Kar 5512
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
1. Heard Mr. N. Venkataraman, the learned ASG appearing for the Revenue and Mr. Porus Kaka, the learned senior counsel appearing for the respondent – assessee.
2. We are of the view that no case is made out for interference in the impugned judgment(s) and order(s) passed by the High Court.
3. The Special Leave Petitions are, accordingly, dismissed.
4. Pending application(s), if any, shall stand disposed of.
