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My question is similar to this question - SSRS on Non-SQL Azure VM

We are developing a web app on ASP.Net MVC. We would like to use SQL Server on VM with SSRS for reporting requirements. Should we use the same SQL server instance for the web application or should we have a seperate SQL server Azure istance? What is the difference between SQL Server VM and SQL Server Azure in terms of cost, performance, availability?

Are there any benefits if I use Azure SQL server only for the web application and SQL Server VM only for SSRS?

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SQL Azure will no longer support Reporting Service, see this FAQ http://msdn.microsoft.com/library/azure/dn528853.aspx for details. So if you need SSRS, you should use a SQL Server VM. You can find SQL Server VM images from the Azure gallery.

SQL Azure is a fully managed service, whereas SQL Server VM is completely owned by you. You need to maintain the database yourself. So from maintenance perspective, there is advantage of using SQL Azure for your web application, and SQL Server VM only for SSRS.