Rackspace Vs DCIT (ITAT Mumbai)
Conclusion: Income from cloud hosting services had erroneously held as royalty within the meaning of explanation (2) to section 9(1)(vi) as well as Article 12(3)(b) of the Indo-USA DTAA by AO and DRP as the Data Centre and Infrastructure therein was used to provide services belonged to assessee and customer did not have physical control or possession over the servers and right to operate and manage this infrastructure/servers vested solely with assessee. The customer was not even aware of the specific location of server in Data Centre and even otherwise, there was no PE of the assessee in India and hence, no income could be taxed in India in term of Indo-US DTAA.
Held: Assessee has filed its return of income disclosing the total income earned from provisions of public cloud hosting and dedicated/ managed hosting of services to Indian customers. Assessee claimed that this income was in the nature of business income and not taxable in India in the absence of Permanent Establishment of the assessee in India i.e. (PE). AO held that the receipt received by assessee in respect to royalty and fee for technical services on account of public cloud hosting and dedicated/ managed hosting of services to Indian customers were taxable in India. It was held that the agreement between assessee and its customer was for providing hosting and other ancillary services to the customer and not for the use of / leasing of any equipment. The Data Centre and the Infrastructure therein was used to provide these services belong to the assessee. The customers did not have physical control or possession over the servers and right to operate and manage this infrastructure / servers vest solely with assessee. The agreements entered into the service level agreements. The agreement was to provide hosting services simpliciter and was not for the purpose of giving the underlying equipment on higher or lease. The customer was not even aware of the specific location of the server in the Data Centre where the customer application, web mail, websites etc. In view of these facts, income from cloud hosting services had erroneously held as royalty within the meaning of explanation (2) to section 9(1)(vi) of the Act as well as Article 12(3)(b) of the Indo-USA DTAA by the AO and DRP. Even otherwise, there was no PE of the assessee in India and hence, no income could be taxed in India in term of Indo-US DTAA.
FULL TEXT OF THE ITAT JUDGEMENT
These three appeals by the assessee are arising out of the different orders of Dispute Resolution Panel-2, Mumbai [in short ‘DRP’], in objection No. 279, 007, 037 vide direction dated 28.12.2015, 21.02.2017, 15.09.2016. The Assessments were framed by the Dy. Commissioner of Income Tax (Int. Tax)-Circle 4(1)(1), Mumbai (in short ‘DCIT/AO’) for the assessment years 2012-13, 2013-14 & 2014-15 vide order dated 15.01.2016, 07.11.2016, 08.12.2016 under section 144C(5) read with section 143(3) of the Income Tax Act, 1961(hereinafter ‘the Act).
2. The first common issue in these appeals of assessee is against the order of DRP holding income from cloud hosting services as royalty within the meaning of explanation 2 to section 9(1)(vi) of the Act. As the issue is exactly identical in all the assessment years i.e. AY 2012-13 to 2014-15, we take up the issue from AY 2012-13 and will decide the issue for all the appeals. For this assessee has raised the following grounds:-
“Ground no. I: Income from cloud hosting services is erroneously held as royalty within the meaning of explanation 2 to section 9(I)(vi) of the Income Tax Act. 1961 (the Act) as well as Article 12(3)(b) of the India-US tax treaty.
1.1. On the facts and circumstances of the case and in law, the learned Deputy Commissioner of Income- tax (International tax) – 4(1)(1) (“AO”) pursuant to the directions of the Hon’ble Dispute Resolution Panel (DRP) erred in holding that cloud hosting system is combination of hardware, software and networking elements that constitutes industrial / commercial / scientific equipment and the income of Rs.29,49,01.258/- earned by the appellant from cloud hosting services is for use of or right to use industrial commercial scientific equipment which would constitute royalty under section 9(1)(vi) of the Act.
1.2. On the facts and circumstances of the case and in law, the learned AO pursuant to the directions of the Hon’ble DRP erred in holding that the income earned by the appellant is for use of or right to use industrial I commercial / scientific equipment and constitutes royalty under Article 12(3)(b) of the India-US tax treaty.
1.3. On the facts and circumstances of the case and in law, the learned AO / Hon’ble DRP erred in holding that the definition of royalty under the Act (as retrospectively amended by Finance Act. 2012) can be applied even for the purposes of determination of royalty income under Article 12 of the India – US tax treaty in the absence of any corresponding amendment in the India-US tax treaty.
1.4. On the facts and circumstances of the case and in law, the learned AO pursuant to the directions of the Hon’ble DRP erred in holding that the assessee is providing license to clients for use of third party software and the income earned therefrom is also royalty under the Act as well as the India – US tax treaty.
1.5. Without prejudice to aforesaid, the learned AO erred in holding that the amendment to the definition of ‘royalty’ under Section 9(l)(vi) of the Act made by Finance Act, 2012 is retrospective in nature and the same has only clarified the meaning of the term ‘royalty’ under the Act.”
3. Briefly stated facts are that the assessee has filed its return of income for the AY 2012-13 disclosing the total income of ₹ 29,49,01,258/-earned from provisions of public cloud hosting and dedicated/ managed hosting of services to Indian customers. The assessee claimed that this income is in the nature of business income and not taxable in India in the absence of Permanent Establishment of the assessee in India i.e. (PE). Accordingly, the assessee claimed refund of ₹ 1,09,50,295/- on account of TDS etc. The AO framed the draft assessment order dated 30.03.2015 under section 144C(1) r.w.s 143(3) of the Act by holding that the receipt received by the assessee in respect to royalty and fee for technical services on account of public cloud hosting and dedicated/ managed hosting of services to Indian customers are taxable in India. The assessee carried the matter before DRP and raised objections. But the DRP vide order directions dated 28.12.2015 under section 144C(5) directed the AO to treat the income from cloud hosting services as royalty within the meaning of section 9(1)(vi) of the Act as well as under Article 12(3)(b) of Indo-US DTAA, by observing as under: –
“3.4 Discussion and directions of DRP:
3.4.1 We have perused the submissions made by appellant as above. The case of the appellant primarily hinges upon the assumption that since the agreement is for service and not for leasing or hiring of equipment and since the customer has no physical control/ possession over the equipment, no right to use of an industrial, commercial or scientific equipment has been granted by the assessee and that the assessee and that the services rendered by the appellant are in the nature of standard facilities extended to the payers. The AO has discussed in great details the nature of services rendered by appellant to its customers in Para 5.5. of the assessment order which clearly suggest that the services provided by appellant are under contractual agreements with certain rights and restrictions for both parties. The appellant provides rack space in its data centers situated outside India which host the customer’s data/ applications. The data center house highly confidential and privileged data of various customers and hence needs robust foolproof security systems in place. The appellant is as availability of live assistance twenty-four hours per day, seven days per week, year round by Rackspace employees with training and experience relative to the Services and any additional level of assistance offered by Rackspace for the specific Services ordered by clients. Para 19 of the Rackspace Cloud Terms of service (as rendered by AO in assessment order) deal with software which suggests that the appellant through its hosting services, is also providing use of third party software to clients. Para 30 to 38 of the Rackspace Cloud Terms of service (as referred by AO in assessment order provides for the additional terms for certain services which suggest that part from providing server and other equipments, various other services are also provided by the appellant, which are highly technical and specialized services and it is the responsibility of the appellant to provide the same. Moreover, these services are ancillary and subsidiary to the enjoyment of server and other equipments for which the payments are being received by the appellant. Thus a data center is a specialized facility which comprises inter alia, the server on which data/ applications are actually hosted and network, hardware equipments winch facilitate the connectivity of the server with the outside world and other software to process the data on the server. Thus the data center comprising of hardware, operating software and network will be in nature of an industrial/commercial/ scientific equipment and customer uses the Cloud infrastructure and also has access and control over such infrastructure for limited purpose of its use to the extent authorized under the agreement, as the data stored on server at all times remains the exclusive control and ownership of the customer only. Hence by entering the agreements for using the data center and availing other specialized services through such data centers, the customer gels the right to use the industrial/commercial/ scientific equipment and the payment for such use will be royalty u/s 9(1)(vi) of the Act By use of the property under agreement, the customer gets economic and possessory interest in such property to such extent and hence it would fall under meaning of Royalty even without the amendment as held by Madras High court in case of Verizon Communication Singapore Pte 361 ITR 575 (Mad). The High court further observed in the context of DTAA with Singapore that the definition of ‘royalty’ under tax treaty and the Act are in pan – materia. The provisions of Royalty under DTAA with USA are similarly worded as that of Singapore and hence the observations of High court shall equally apply to present case also.
3.4.2 Even otherwise, the Finance Act 2012 has clarified that the payment for use of right, property or information would be considered as royalty irrespective of whether the possession and control of the right, property or information is with the payer, whether it is actually used by the control of the right, property or information is with the payer, whether it is actually used by the Prayer or whether the location of such right, property or information is in India. This amendment further strengthens the contention that such amount is taxable as Royalty under Indian domestic tax law even in situations where the customer arguably does not possess or control the right, property an information. The Madras high court in Verizon Communication Singapore Pte (supra) also observed that after the amendment was introduced in Section 9(1)(vi) of the Act in the year 2012, irrespective of possession, control with the payer or use by the payer or the location in India, the consideration would nevertheless be treated as royalty’. The decisions relied by the appellant in case of People Interactive (I) P Ltd delivered on 29/2/2012 is therefore distinguishable as it has based its decision mainly on the arguments that no right to use was granted by appellant as the possession and control of the right, property or information or the location of such right, property or information was not with the pave: in India and that the services were not rendered in India. The amendment u/s 9(1)(vi) w.r.e.f. by Finance Act 2012 was not at all considered by the ITAT while rendering the decision in case of People Interactive (I) P Ltd. (supra). Hence, the same will have no binding precedent value. For the same reasons all other decisions rendered on the basis of possession, control or location of the right, property or information, prior to retrospective amendment shall not be applicable now. Hon. Madras High court in Verizon Communication Singapore Pte (supra) after considering the decision of Delhi High court in Asia satellite Telecommunications Co. Ltd 197 Taxmann 263, also observed that in light of the Clarificatory amendments inserted in Section 9 of the Act by the Finance Act, 2012 the decision of the Delhi High court in the case of Asia Satellite is distinguishable and has no relevance to the case on hand. On the other hand, the ratio of decision of ITAT Mumbai in case of Reuters transactions services Ltd. (supra) Viacom 18 Media Pvt. Ltd. (supra), will squarely apply to the facts of the assessee’s case as in these decisions post amendment the possession, control or location of the right, property or information have not been considered to be relevant for determination of royalty under the Act. The decision in Reuters transactions services Ltd(supra) was also rendered in context with DTAA with USA. it is also undisputed fact that the appellant also provides the software supplied by third parties wider the license agreements and therefore payment for use of such software will also be in nature of Royalty under the Act in view of Mumbai ITAT decision in case of Reliance Infocom Ltd 159 TTJ 589 (mum).
3.4.3 The other major contention of appellant is that the amendment in the Act cannot he read into the treaty to determine the nature of payment as Royalty under the DTAA. We have considered the decisions relied by appellant in support of this contention including the decision of jurisdictional high court in case of Siemens Aktiengesellschaft 310 ITR 320(3om). It is noted that the retrospective amendment in explanation 5 has only clarified the meaning of Royalty. It has not a: all expanded the scope of royalty. The clarification was made to remove the conflicting views on effect of location / possession /control/delivery/use of the royalty rights etc. by the user in India without bringing any fresh item to be taxable s royalty. It is for this reason the amendment is retrospective and starts with clause “for removal of doubt it is clarified”. Hence by amendment it is not that the definition of Royalty is being enlarged. It is also not a case where items not taxable under DTAA are being now taxed under the Act. Definition of Royalty in DTAA and Act are Pari material as recently held by Madras High court also in case of Poompuhar Shipping 360 ITR 257 and Verizon Communication Singapore Pte 361 ITR 474 (Mad). Art 3(2) of DTAA stipulates that any term not defined shall have meaning as assigned under Act. As per section 90(2), provisions of DTAA shall apply if they are more beneficial in case there is conflict between DTAA and Act. There can be no dispute that for tax liability of any item beneficial provision has to be given preference. But there it is not a case of conflict of brining a new item of taxation or creating a fresh tax liability under Act in respect of Royalty payments which is otherwise not taxable under DTAA. Rather it is a case of Clarificatory only wherein the expression ‘right to use’, which is used both under the Act and DTAA in the context of Royalty, has been explained to be fulfilled whether or not, the location/possession/control/delivery/use of the rights, property or equipment, etc. by the user was in India. Thus in absence of any clarification in DTAA in respect of location /possession /control /delivery /use of the royalty rights etc. by the user in India for ascertaining the meaning of Royalty, the conditions as per explanation 5 has to be read into for purposes of DTAA also in view of article 3(2) provided within the DTAA itself.
3.4.4 The decision in case of Siemens Aktiengesellschft (supra) very heavily relied by appellant, which has been subsequently followed all other subsequent decisions relied by the appellant in its submissions as distinguishable. The controversy in Siemens (supra) was for the AY 79-80 under DTAA with Germany. The DTAA with Federal republic of Germany as notified as per (3SR 1090 on 13/9/1960 was applicable for AY 79-80. It did not have any definition for the term Royalty nor was there any separate article to deal with Royalties other than those mentioned in Article 111(3). Article III was dealing with taxability of industrial and commercial profits (business income) only and to the extent it was attributable to PR The Chennai DTAA was thereafter amended by notification dated 26-8-1985 wherein Article VIIlA of DTAA was introduced which deals with royalties and the term Royalty was also defined therein. Under the Act section 9(l)(vi) defining royalty was introduced w.e.f 1/4/1976. Thus for AY 79-90 the situation was that there was a definition of royalty tinder the Act w.e.f 1/4/76 but there was no definition of Royalty under the German DTAA. So any income, even if in the nature of Royalty, was taxable only as industrial or commercial profits (business income) only to the extent it was attributable to PE. Article III of the DTAA applicable at that time read as under:
Article III
(1) Subject to the provision of paragraph (3) below, tax shall not be levied in one of the territories on the industrial or commercial profits of an enterprise of the other territory unless profits are derived in the first mentioned territory through a permanent establishment of the said enterprise situated in the first mentioned territory. If profits are so derived, tax may be levied in the first mentioned territory on the profits attributable to the said permanent establishment.
(2) There shall be attributed to the permanent establishment of an enterprise of one of the territories situated in the other territory, the industrial or commercial profits which it might be expected to derive in that other territory if ti were an independent enterprise engaged in the same or similar activities under the same or similar conditions and dealing at arm’s length with the enterprise of which it is the permanent establishment. In any case where the correct amount of profits attributable to a permanent establishment is incapable of determination, or the ascertainment thereof presents exceptional difficulties, the profits attributable to the establishment may be estimated on a reasonable basis.
(3) For the purposes of this Agreement the term “Industrial or commercial profits: shall not include income in the form of rents, royalties, interest dividends, management charges, remuneration for labour or personal services or income from the operation of ships or aircraft but shall include rents or royalties in respect of cinematographic films.
3.4.5 The above provisions of DTAA suggest that (j) there was no provision to tax Royalty under DTAA by way of a separate provision other than Royalty in respect of Cinematographic film tinder article 111(3) and (ii) it was to be taxed as cinematographic or industrial profits only if it was attributable to presence of a PE in India. Thus it was very clear that under the relevant DTAA no item of receipt in nature of Royalty could be included as commercial profits under Article 111(3) unless it related to the use of cinematographic films. The case of the revenue in that case was that since the amounts received by assessee was in nature of Royalty under the Act after amendment u/s 9(1)(vi) w.e.f 1.4.76 and that Article 111(3) of DTAA did provide for taxation of Royalty, the amount was taxable as Royalty, even if there was no PE. Though the amounts received by assessee were held to be Royalty under the Act but in absence of any taxability of royalty at all under the DTAA and moreover in absence of any provision in DTAA granting the taxation rights to source country on royalties, the court held that beneficial provisions of DTAA are to be given precedence in view of section 90(2) and that the meaning of Royalty under the Act could not be imported to Article 111(3) of DTAA, which dealt specifically with industrial and commercial profits only and specifically excluded the income from Royalties other than in respect of cinematographic films. The income could not be taxed as industrial or commercial profits also under article 111(1) as there was no PR Thus in this case as per the prevalent DTAA at that time, the only taxable income in the nature Royalty was from cinematographic films and all other Royalty were specifically excluded from ambit of article Ill. At the same time there was no separate provision for taxing the Royalty of any nature under DTAA. It was in the back ground of these provisions of the IYFAA with Germany which existed at that time that the court held that definition of Royalty as per Act could not be imported to DTA.A. Hence the decision of High court in Siemens Aktiengesellschaft (supra) cannot be applied to the cast where the definition/taxing rights for royalty has been specifically provided under the applicable DTAA also. Based on above decisions of Siemens Akticngcscilschaft, the contention that unless the definition of Royalty is changed. the amendments brought by Finance Act 2012 have no implication was also also argued by assessee in case of Viacom 18 Media Pvt. Ltd(supra) wherein ITAT has upheld the above argument of the revenue in Para 7,10,12 of its order dated 28/03.2014 and subsequently in case of Reuters transactions services Ltd. (supra) in para 10 of its order dated 14/07/2014, which was also under the USA treaty.
3.4.6 In view of the above discussions, the order of the AO treating the amounts paid as Royalty under the Act as well under the DTAA is upheld.”
4. Further, the assessee raised objection with regard to the findings of the AO in regard to the receipt of cloud hosting services of technical services within the meaning of explanation (2) to clause (vii) of sub-section (1) of section 9 of the Act and Article 12(4)(a) of Indo-USA DTAA. But the DRP again affirmed the action of the AO by observing in para 4.3 as under: –
“4.3 Discussion and Direction of DRP
4.3.1 Since in earlier Para 4.24 we have already held that the payments are in nature of Royalty under 9(1)(vi) of the Act as well as under Article 12(3) of the DTAA, the question of taxing same receipts as Fee for included services under section 9(1)(vii) of the Act and under Article 12(4)(a) of the DTAA becomes in fructuous. Hence the same is not adjudicated.”
5. But, the AO finally framed the final assessment order under section 144C(5) read with section 143(3) dated 15.01.2016 by holding that the income of the assessee is taxable in India, in view of the directions of the DRP, on account of the following :-
“the receipts of INR 29,49,01258/- from provisions of cloud hosting services are also in the nature of royalty within the meaning of section 9(1)(vi) of the Act as well as Article 12(3)(b) of the India-US tax treaty; and Without prejudice to above, the receipts from provision of cloud hosting services are also in the nature of technical services/ fees for included services within the meaning of explanation (2) to clause (vii) of subsection (1) of section 9 of the Act and Article 12(4)(a) of the India US tax treaty;.”
6. According to AO, the assessee is exigible to tax at the rate prescribed under section 115(1)(b) of the Act on payment of royalty as fee for technical services to non-resident increased by applicable surcharge and education cess. According to AO, the rates are not beneficial rates of taxation as provided in Article 2 of the Double Taxation Avoidance Agreement (DTAA) between India and USA. Accordingly, the AO assessed the assessee. Aggrieved, assessee came in appeal before Tribunal.
7. Before us, the learned Counsel for the assessee stated that the assessee is a company incorporated and a tax resident of USA. The assessee is managed cloud computing company and providing services to its customers on payment of monthly fees and usage based fee. Hostage services comprises of hosting for applications, web mail, websites, etc. The learned Counsel for the assessee stated that the activity note was filed before the AO and DRP. He stated that the assessee is carrying out two types of hosting services that are customer typical purchase. He referred from the note which is as under: –
“Public Cloud Hosting: Public Cloud customers sign up online and agree to standard terms and conditions but do not sign actual written contracts. Public Cloud hosting is provided as a service over the Internet. The customer’s applications are hosted by the cloud service provider.
The core infrastructure is shared by several organizations but each organization’s data and application usage is segregated by permitting access to specific data applications only to authorized users. Public Cloud is typically billed based on usage (pay-as-you-go model) so the customer does not have a long term commitment. It is a month-to-month service with no actual commitment from the customer to use it in any volume for any length of time.
Dedicated/ Managed hosting: The services rendered under to Dedicated’ Managed Hosting customers is largely similar to the services rendered under to Public Cloud customers. The identified core infrastructure is used only for one customer wherein the customer would have remote access to the servers through the internet, but no access to the firewalls, load balances and network devices which are critical for the assessee to provide services to its customers.
For Dedicated Hosting, the customer signs a contract which typically has a duration of 12-36 months. It may be noted that a new contract is not signed every year. In addition, when a contract term ends, the customer can continue their dedicated service on a month-to-month basis without signing a new contract. The same terms and fees will apply unless a new contract is signed.
The main distinction as compared to Public Cloud Hosting is that only a single customer’s data! applications would be stored on a given server in the data center in case of Dedicated Hosting as opposed to the multi-tenant usage of servers by several organizations for Public Cloud.
Storage warehouse is a service offering that is provided with Dedicated/Managed hosting. It would be covered in a Dedicated Hosting services contract and be invoiced with the rest of the Dedicated Hosting services. It could also be called “offsite retention’, “managed back-up” etc. It is essentially a service that addresses certain disaster recovery needs of customers.”
8. The learned Counsel for the assessee Shri. PJ Pardiwala, stated that from the distribution of services of public cloud hosting services and dedicated/ managed hosting services as per agreement between the assessee and its customers, the same provides for hosting and other ancillary services. The learned Counsel for the assessee stated that apart from merits this issue has already been settled by the co-ordinate bench of the Tribunal in the case of ITO (IT) TDS-4, Mumbai vs. People Interactive (I) P Ltd. in ITA Nos. 2179 to 2182/Mum/2009 for AY 2005-06 to 2008-09, wherein People Interactive (I) P Ltd. has availed the services of the assessee i.e. Rackspace. The fact is that People Interactive (I) P Ltd was the owner / host of www.shaadhi.com where individuals can registered and exchange the relevant information for matrimonial alliances on payment of subscription amount. People Interactive (I) P Ltd availed the services of the assessee vide a contract dated 01.01.2007, which was later on modified. The assessee Rackspace offered advance type of dedicated hosting solutions to that party and services provided by the assessee to the said party was under litigation before the AO for non-deduction of TDS and hence, the AO passed the order under section 201(1) and 201(1A) of the Act and the Tribunal finally held that the payment is neither royalty under section 9(1)(vi) of the Act nor as per Article 12 of Indo-US DTAA and Rackspace, the assessee, being having no PE in India not liable to tax in India, there is no requirement of TDS on these services. The Tribunal finally considered the agreement clauses and decided the issue vide para 7 to 9 as under:-
“7 We have considered the rival contention as well as the relevant material on record. We find that the payments in question were made by the assessee to Rackspace in pursuant to the contract/agreement between the parties. The CIT(A) has extracted the relevant contents/clauses of the serviced level agreement between the assessee and Rackspace in pars 10 & 10.1 of the impugned order as under;
“10. I have gone through the issue. The appellant is the owner of the popular website Shaadi.com. To maintain its website, the appellant has entered into a contract with Rackspace who provides the hosting services. There is a master, service agreement which defines “IT hosting service” and it means the information technology hosting services described in a service order and Service Level Agreement plus support. Details about the Service Level Agreement are extracted below:
Service Level Agreement.
Choosing a hosting provider is never easy and it seems to be risky when your site is at stake. We know that the availability of your site is of utmost importance and entrusting your website to Rackspace is something that we taken seriously. That’s why we have built the hosting industry’s most aggressive Service Level Agreement (SLA) to cover the multiple components that keep your site up and running.
Rackspace’s SLA is a contract between you, the customer and Rackspace. It defines the terms of our responsibility and the money back guarantees f our responsibilities are not met. We want our customers to feel at ease With their decision to move their site to Rackspace, and knowing that Rackspace takes your site’s uptime as seriously as you do is imperative.
The Rackspace SLA covers three components that support the availability of your web site:
100% Network Uptime
Rackspace guarantees that its network will be available 100% of the time in a given month, excluding scheduled maintenance. Network uptime includes functioning of all network infrastructure including routers, switchers and cabling, but does not includes services or software running on your server. Network downtime exists when a particular customer is unable to transmit and receive data and is measured from (he time the trouble ticket is opened.
Rackspace Guarantee: Upon experiencing downtime, Rackspace will credit the customer 5% of the monthly fee for each30 minutes of downtime (up to 100% of customer’s monthly fee for the affected server).
Infrastructure
Rackspace guarantees that the critical infrastructure systems will be available 100% of the time in a given month, excluding scheduled, maintenance. Critical infrastructure includes functioning of all power and HVAC infrastructure including UPSs, PDUs and cabling, but does not include the power supplies on customers’ servers. Infrastructure downtime exists when a particular server is shutdown due to power or heat problems and is measured from the time the trouble ticket is opened to the time the problem is resolved and the server is powered back on.
Rackspace Guarantee: Upon experiencing downtime, Rackspace will credit the customer 5% of the monthly fee for each 30 minutes of downtime (up to 100% of customer’s monthly fee for the affected server).
Hardware
Rackspace guarantees the functioning of all hardware components and will replace any failed component at no cost to the customer. Hardware is defined as the Processor(s), RAM, hard disk(s), motherboard. NIC Card and other related hardware includes with the server. This guarantee excludes the time required to rebuild a RAID array and the reload of
certain operating systems and applications.
Hardware replacement will begin once Rackspace identifies the cause of the problem, hardware replacement is guaranteed to be complete within one hour of’ problem identification.
Rackspace Guarantee: In the event that it takes us more than one your to replace faulty hardware, packspace will credit the customer 5% of the monthly fee per additional hour of downtime (up to 100% of customer’s monthly fee for the affected server)”
10.1 Details about Rackspace Service Levels is extracted below;
“No matter the size of your business, you will always get the kind of support the goes for beyond the ordinary. It’s truly Fanatical Support and since different businesses have different needs, we offer you two service levels — Managed and Intensive. So you can determine what kind of support works best for you, instead of us deciding for you. Regardless of which service level you go with, you’ll always get all of the following, without exceptions:
Fanatical Support any time, anywhere, any way.
You dedicated Support Team with an Account Manager a td Business Development Consultant.
Direct and unlimited access to live, expert support 24x7x365, no call centre
Immediate response to your Emergency Support Tickets.
Configuration management available through your MyRackspace customer portal.
Flexibility to interact with Rackspace and your configuration based on your preference.
Eight world class data centers and the Rackspace Zero-Downtime Network.
100% Network Uptime Guarantee.
1-Hour Hardware Replacement Guarantee.
Weekly Managed Backup plus daily differential or incremental backup.
Immediate response to Down Events.
Pager and email alerts.
