GoDaddy.com LLC Vs ACIT (Delhi High Court)
Tax Certainty Cannot Be Sacrificed at the Altar of Revenue: Delhi HC Stays Reassessment Against GoDaddy, Calls AO’s Approach “Over-Zealous”
Summary: The Delhi High Court has stayed reassessment proceedings initiated against GoDaddy.com LLC after making a prima facie observation that the AO appeared to be proceeding with an “over-zealous approach” guided by revenue considerations, while ignoring objectivity, certainty & finality—basic tenets of the tax adjudication system.
The Court took note of GoDaddy’s contention that the tax character of its domain-registration receipts had already been examined across several assessment years, that the Delhi High Court had decided the royalty issue in its favour and that subsequent ITAT decisions had also attained finality because the Revenue had not challenged them.
This is, however, an interim order. The High Court has not finally quashed the reassessment proceedings or conclusively decided whether GoDaddy has a Permanent Establishment in India.
GoDaddy Merely Acts as Domain Registrar
GoDaddy explained that it merely functions as a registrar facilitating domain-name registrations for Indian customers. It neither owns the domain names nor possesses proprietary or licensing rights over them.
Since GoDaddy does not own the domain names, it cannot confer any right to use or transfer a right to use the domain name to its customers. Therefore, amounts received for facilitating registration of domain names cannot be characterised as royalty for use of intellectual property.
GoDaddy pointed out that this position had already been accepted by the Delhi High Court in its own case for AYs 2013-14 to 2015-16, where domain-registration receipts were held not taxable as royalty u/s 9(1)(vi).
It was further submitted that the ITAT had rendered favourable decisions concerning the character of these receipts for AYs 2016-17 to 2019-20 and AYs 2021-22 & 2022-23. According to GoDaddy, the Department had not filed appeals against those Tribunal orders and the findings had consequently attained finality.
Nil-Withholding Certificate Also Directed Earlier
GoDaddy also referred to an earlier order dated 04.02.2026 passed in incidental proceedings relating to a certificate u/s 197.
In those proceedings, the Delhi High Court had directed the competent authority to issue a certificate authorising deduction of tax at nil rate in conformity with the Court’s earlier judgment, subject to the caveat that GoDaddy did not have a Permanent Establishment in India.
GoDaddy maintained that there was not even prima facie material indicating the existence of a PE in India.
Reassessment Initiated Despite Earlier Decisions
Despite the prior judicial history, the AO initiated reassessment by issuing notice dated 30.03.2026 under the new Section 148A framework.
GoDaddy filed a detailed reply placing the earlier High Court judgment, ITAT orders and relevant factual material before the AO. However, according to the petitioner, the AO cursorily rejected the objections through an order dated 30.06.2026 and proceeded to issue notice u/s 148.
GoDaddy challenged the reassessment as arbitrary, contrary to the settled legal position and fundamentally without jurisdiction.
It was argued that the taxability of the domain-registration receipts had been repeatedly examined in earlier years, including through scrutiny assessments u/s 143(3). Reopening the same issue once again reflected a predetermined intention to tax the receipts despite binding or final judicial findings.
The assessee characterised the proceeding as one involving a change of opinion in substance, even if the exact assessment year under challenge had not earlier been scrutinised on identical lines.
Court Questions Revenue-Driven Reopening
After hearing the petitioner, the High Court issued notice in the writ petition as well as the stay application. The Department accepted notice and was granted eight weeks to file its reply, with six weeks thereafter allowed for filing a rejoinder.
More significantly, the Court recorded its prima facie concern regarding the manner in which the AO had proceeded.
The Bench observed that the AO appeared to be adopting an over-zealous approach driven by revenue considerations. In the Court’s view, the AO had apparently ignored objectivity as well as the principles of certainty and finality governing tax adjudication.
The Court accordingly stayed further proceedings pursuant to the reassessment notice until the next date of hearing. The matter was directed to be listed on 20.01.2027.
Consistency Does Not Mean Automatic Immunity
The interim order reflects the importance of certainty where the same assessee, the same business model and the same character of receipts have been examined over several years.
Although the doctrine of res judicata does not strictly apply to income-tax proceedings, an issue consistently decided in earlier years cannot ordinarily be reopened year after year without some material factual or legal distinction.
The Revenue may still initiate proceedings for a later year if new evidence indicates the existence of a PE, a changed business model, different contractual arrangements or another material variation. But the reasons must identify that distinction. A general desire to reconsider an already settled tax position is not sufficient.
Author’s Comments
The strongest feature of this order is not merely the grant of stay but the Court’s express criticism that the AO appeared to be guided by revenue considerations rather than objective adjudication.
At the same time, this remains an interim order. The Revenue has yet to file its detailed reply, and the Court has not finally decided whether the reassessment notice is without jurisdiction. It has also not conclusively ruled on the existence or absence of a PE for the relevant year.
GoDaddy’s earlier success on the royalty question does not automatically decide the PE issue. If the Department possesses fresh, year-specific material showing a fixed place, dependent agent or other taxable presence in India, that question may require independent examination. However, such material must be disclosed and subjected to objective analysis.
The principle emerging at this stage is important: tax administration cannot repeatedly reopen an issue settled across several years merely because another view may yield more revenue. Finality, consistency & certainty are not concessions to the taxpayer; they are essential attributes of a fair tax system.
Cases Discussed
- Godaddy.Com LLC Vs ACIT (Delhi High Court) – AYs 2013-14 to 2015-16 – domain-registration receipts held not taxable as royalty.
- GoDaddy.com Vs ACIT (ITAT Delhi) – favourable Tribunal decisions concerning domain-registration and non-domain service receipts.
FULL TEXT OF THE ORDER OF DELHI HIGH COURT
CM APPL. 62215/2026 (exemption)
1. Allowed, subject to all just exceptions.
2. Application stands disposed of.
W.P.(C) 13368/2026 & CM APPL. 62216/2026 (stay)
3. Apprising the Court about the nature of petitioner’s business, Mr. Sachit Jolly, learned senior counsel submitted, that the petitioner merely act as a Registrar in providing the domain registrations to the Indian customers, it is neither the owner of the domain name nor is the holder of any proprietary or licensing rights of those domain names and in the absence of ownership of the domain names, it cannot confer the right to use or transfer the right to use such domain names to the customers or another person/entity.
4. He further submitted that the above stand of the petitioner has been upheld by Delhi High Court in petitioner’s own case for Assessment Years 2013-14 to 2015-16 and it has been held that the income earned from the customers for getting their domain name registered, cannot be treated as royalty under the provisions of Section 9(1)(vi) of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act of 1961’). He further submitted that the Income Tax Appellate Tribunal (hereinafter referred to as the ‘Tribunal’) in petitioner’s case for Assessment Years 2016-17 to 2019-20 as well as 2021-22 & 2022-23 has held that such receipts are also Fee for Technical Services and against such orders of the Tribunal, no appeal has been preferred by the Revenue and therefore, such finding has attained finality.
5. Learned senior counsel further submitted that in an incidental matter, relating to grant of certificate under Section 197 of the Act of 1961, vide its order dated 04.02.2026, this Court had directed the competent authority to issue a certificate at nil rate as per the judgment of this Court, subject of course to a caveat that if Permanent Establishment (PE) is not found.
6. In the backdrop of the aforesaid facts, learned senior counsel argued that though there is not even an iota of evidence indicating the petitioner is having a Permanent Establishment in India, yet, the Assessing Officer, for reasons best known to him, has initiated proceedings under Section 148 of the Act of 1961 by way of notice dated 30.03.2026 under Section 148A(1) of the Act of 1961 issued on 30.03.2026 and in spite of the fact that the petitioner filed a detailed reply bringing the above facts and relevant judgments to the notice of the Assessing Officer, he has brushed aside all those submissions and has rejected petitioner’s objections cursorily by way of passing an order dated 30.06.2026 under Section 148A(3) of the Act of 1961.
7. Learned senior counsel argued that the impugned order dated 30.06.2026 is arbitrary and contrary to facts and law. He added that the same shows the adamancy of the Assessing Officer, who was pre-determined to proceed against the petitioner.
8. Learned senior counsel argued that the proceedings against the petitioner are fundamentally void and without jurisdiction besides being arbitrary. He contended that the petitioner’s case has been examined year-after-year and in most of the years, petitioner’s case has been subjected to scrutiny assessment under Section 143(3) of the Act of 1961. And, therefore, it is a case of change of opinion, maybe not for this particular Assessment Year. He argued that the petitioner’s case cannot be subjected to proceedings under Section 148 of the Act of 1961.
9. Issue notice of the writ petition so also of the stay application.
10. Mr. Siddhartha Sinha, learned senior standing counsel accepts notice on behalf of the respondent-department. Mr.Sinha prays for and is granted eight weeks’ time to file reply. Rejoinder, if any, be filed within six weeks thereafter.
11. Having heard learned counsel for the parties and in view of what we have noted above, we are of the view that the Assessing Officer is proceeding in the matter with an over-zealous approach, being guided by revenue considerations. He has ignored objectivity and basic tenet of tax adjudication system, being certainty and finality of the assessment proceedings.
12. The proceedings in furtherance of notice dated 30.06.2026, issued under Section 148 of the Act of 1961 are therefore stayed until the next date of hearing.
13. List this case on 20.01.2027.
