The Delhi High Court set aside an income-tax department's reassessment order against Amazon Web Services and ordered a fresh review of the case.
Reader brief
Through the Reader lens: The Delhi High Court has nullified a tax department order that sought to reopen a tax assessment for Amazon Web Services regarding over ₹4,500 crore in foreign remittances. The court directed the assessing officer to hold a personal hearing to allow the company to demonstrate whether the transactions in question had already been considered in a previous assessment. The case highlights ongoing disputes over the taxability of cloud service payments and the extent of the tax department's jurisdiction for reassessment.
What to watch next
- Outcome of the personal hearing between the Income Tax Department and Amazon Web Services
- Resolution on whether the flagged remittances were covered in the previous assessment
- Clarification on the tax treatment of cloud computing payments as royalty or fees
What was said1
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Porus Kaka
1 quote“The department hasn’t gone on individual remittances. They have assessed my global income in the United States on a proportionate basis across the globe. What is left to be assessed? … What is left to be assessed in India?”
In the article
…The department, he argued, could not subsequently pick out individual payments made from India and treat them as fresh income that had escaped assessment, without first establishing what remained to be examined. “ The department hasn’t gone on individual remittances. They have assessed my global income in the United States on a proportionate basis across the globe. What is left to be assessed? … What is left to be assessed in India? ” Kaka remarked. The high court also questioned the revenue department on what remained to be examined and the basis for determining whether AWS had a permanent establishment (PE) in India, as well as whether the…
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