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22. We find some force in the above argument of the learned Counsel for the assessee. From the various clauses of the agreement which are already reproduced in the preceding paragraphs and the copies of invoices raised, it can be safely concluded that cloud base services do not involve any transfer of rights to the assessee in any process. The grant of right to install and use the software included with the subscription does not include providing any copy of the said software to the assessee. The assessee in the instant case does not get any right of reproduction. The services, in our opinion, merely facilitate the flow of user data from the front run user through internet to the providers system and back. Therefore, the subscription fee in our opinion is merely a consideration for the online access of the cloud computing services for process and storage of data or run ITA No 2028 of 2017 Reasoning Global E-Application Ltd Hyderabad the applications but cannot be considered as Royalty within the meaning of section 9(1)(vi) of the Act.

"7 It was submitted for the assessee that Ld. Tax Authorities below have failed to appreciate the functional aspects of Cloud base service while holding the subscription to cloud base service as royalty. In this context, the co-ordinate bench judgment in M/s. Salesforce.com Singapore Pte. Vs. Dy. D.I.T. Circle- 2(2) with six other connected was relied on to contend that subscription to the cloud computing services do not give rise royalty income. The Ld DR supported the findings of Tax authorities below.

7.1 Giving thoughtful consideration to the matter on record, the bench is of considered view that the cloud base services do not involve any transfer of rights to the customers in any process. The grant of right to install and use the software included with the subscription does not include providing any copy of the said software to the customer. The assessee's cloud base services are though based on patents / copyright, but the subscriber does not get any right of Microsoft Regional Sales Corporation, USA reproduction. The services are provided online via data centre located outside India. The Cloud services merely facilitate the flow of user data from the front-end users through internet to the provider's system and back. The ld. AO has fallen in error in interpreting it as licensing of the right to use the above Cloud Computing Infrastructure and Software (para 10.5 of the Ld. AO order). Thus, the subscription fee is not royalty but merely a consideration for online access of the cloud computing services for process and storage of data or run the applications.

7.2 While dealing with similar question in regard to the case of M/s. Salesforce.com Singapore Pte. (supra) where the said assessee was provider of comprehensive customer relationship management servicing to its customer by using Cloud Computing Services / Web Casting Services, the Bench in its order dated 25.03.2022 held as under :

"28. Considering the facts of the case in totality, in light of the Master Subscription Agreement, we are of the considered view that the customers ITA No 2028 of 2017 Reasoning Global E-Application Ltd Hyderabad do not have any access to the process of the service provider i.e. the assessee, and the assessee does not have any access except otherwise provided in the master subscription agreement to the data of the subscriber.