Case Law Details
Amazon Web Services Inc. Vs ACIT (ITAT Delhi)
Captioned applications have been filed by the assessee seeking stay on recovery of following outstanding demands:
i) Assessment year 2014-15 : Rs.190,85,62,430
ii) Assessment year 2016-17 : Rs.358,27,66,285
2. Before us, learned senior counsel appearing for the assessee submitted that the assessee is a Tax Resident of United States of America (USA) and is engaged in the business of providing Cloud Computing Services to customers around the world. He submitted, based on proceedings under Section 201/201(1A) of the Act conducted in case of Snapdeal to verify TDS compliance, assessment proceedings under Section 147 of the Act were initiated against the assessee and while completing the assessments, the Assessing Officer held that the receipts of the assessee from Cloud Computing Services are in the nature of Royalty and Fee for Technical Services (FTS)/Fee For Included Services (FIS), hence, chargeable to tax in India. He submitted, apart from the fact that the assessment orders are invalid for various reasons, the assessee has a strong case on merits, as, in respect of payers in India from whom the assessee had receipts from Cloud Computing Services, different benches of the Tribunal have held that the receipts cannot be treated as Royalty/FTS. Further, he submitted, the Assessing Officer has made computational error by imposing higher tax rate as per domestic law instead of the tax rates applicable under the relevant tax treaties. He submitted, in case rates provided under the tax treaties are applied, the demand will substantially reduce. He submitted, though, the assessee in this regard has filed rectification applications before the Assessing Officer, however, they are still pending. Thus, he submitted, recovery of outstanding demand may be stayed and early hearing of the appeals may be granted.
3. Strongly opposing grant of absolute stay, learned Departmental Representative submitted, the assessee may be directed to pay 20% of the outstanding demands.
4. We have considered rival submissions and perused the material available on record.
5. The claims and contentions of the parties with regard to issues on merits as well as legal grounds, cannot be considered at this stage as they have to be thrashed out when the hearing in the corresponding appeals takes place. However, considering the prima facie case, balance of convenience and the injury that may be caused to either of the parties due to grant or non-grant of stay, we are not inclined to grant absolute stay. However, we are inclined to grant conditional stay on the following terms:
i) The assessee is directed to pay 10% of the outstanding demand for both the assessment years under dispute on or before 31.03.2023;
ii) The assessee shall furnish bank guarantee so as to cover further 10% of the outstanding demand. The bank guarantee must be furnished before the Assessing Officer on or before 30.04.2023.
6. Subject to the fulfillment of the aforesaid conditions, recovery of the balance outstanding demand shall be stayed for a period of 180 days from the date of this order or till the disposal of the corresponding appeals of the assessee, whichever is earlier.
7. Further, accepting assessee’s prayer, we direct the Registry to fix the corresponding appeals for hearing on 03.05.2023 or on out of turn basis. Pre-hearing formalities must be completed by the parties sufficiently ahead of the date of hearing of appeals.
8. Since, the date of hearing of the appeals was announced in the open court in presence of both the parties, there is no need for issuance of separate notice of hearing to the parties.
9. It is further made clear, in case of any unnecessary adjournment being sought by the assessee, there is likelihood of vacation of the stay order.
10. In the result, the stay applications are partly allowed.
Order pronounced in the open court on 10th March, 2023.
