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16. [2026] 187 taxmann.com 467 (Chennai - Trib.)
DCIT vs. Zoho Corporation
A.Y.: 2013-14 – 2015-16, 2017-18 & 2018-19 Dated: 01 June 2026
Article 12 of the India-USA DTAA – Consideration received for web hosting and cloud computing services was for the use of facility and not for the grant of a right to use equipment; hence, such receipts do not constitute royalty. Unless the DTAA is amended bilaterally, a unilateral amendment under domestic law cannot be read into a tax DTAA.
FACTS
The Assessee was a tax resident of USA. It was engaged in providing web hosting services through its data centres in USA, and received payments from an Indian entity for such services.
The AO issued a notice under section 148, and contended that to render the services, the Assessee was required to maintain servers and computers. Hence, the receipts were for granting right to use such equipment for storing the data. Accordingly, the AO assessed the receipts as royalty under section 9(1)(vi) of the Act, and also under Article 12 of the India-USA DTAA. The AO further contended that such receipts were ancillary to enjoyment of the right, and therefore, they con
