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2. Platform as a Service (PaaS) Model - PaaS is a category of cloud computing services that provides a computing platform and programming tools as a service for software developers. The client does not control or manage the underlying cloud infrastructure, including the network, servers, operating systems, or storage, but has control over the deployed applications.
"The Company provides standard and automated cloud computing services to its customers. In this regard, we have provided below a general understanding of cloud computing services:
- Historically, various organizations which needed to store and process large amounts of data, invested in computing resources i.e., hardware (servers) and software (operating systems). However, such hardware and software resources were costly, capital intensive, required large amount of space and were used in limited capacity by such companies. For e.g., a company may have a complex Enterprise Resource Planning (ERP) system, which would need large storage and processing capability to run, for which it may need to buy large and expensive servers to host the ERP only.
- The Company was one of the first companies to develop web services for computing infrastructure requested by customers. The Company provides quick and easy ways for customers to access flexible, low-cost and on-demand cloud computing services according to their specific needs, when and where they need them."

38. The AO's conclusion that the provision of such service would amount to grant of the 'right to use' scientific equipment and therefore, the payments made were covered under the definition of 'royalty' under the Act as well as under Article 12(4)(a) of the India-US DTAA is erroneous.

39. There is no doubt that the Assessee grants access to standard and automated facilities, which provides computer power, storage, data and other services which may be required by customer for their computing needs. However, there is no material to establish that grant of such service entails transfer of any technical know-how, skill, knowledge or process. The customers of the Assessee do not acquire any right to commercially exploit any of the Assessee's IPRs. The provision of cloud computing services does not entail placing any hardware at the exclusive disposal of the customer. The Assessee grants access to standard and automated services, which are available online. Customers can select from the services offered according to their needs. As explained by the Assessee, cloud computing provides an effective alternative for customers to use cloud computing services instead of buying, owning and maintaining their own data centres and servers.