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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: -