GoDaddy.com LLC Vs ACIT (ITAT Delhi)
ITAT Delhi held that the revenue received by GoDaddy.com LLC from Indian customers for providing services such as domain registration, web hosting, email, etc., is not taxable as royalty or FTS under ITA and/or India-USA DTAA.
This case before the Income Tax Appellate Tribunal (ITAT) Delhi involved GoDaddy.com LLC, a US-based company, and the Assistant Commissioner of Income Tax (ACIT) regarding the taxability of revenue received by GoDaddy from Indian customers for providing various online services. GoDaddy offered services including domain name registration, web hosting, email services, web designing, and reseller support. For the assessment year 2017-18, GoDaddy filed its tax return declaring nil income in India, arguing that the services were rendered outside India and were not taxable as royalty or Fees for Technical Services (FTS) under the Income Tax Act, 1961, or the India-USA Double Taxation Avoidance Agreement (DTAA).
The Assessing Officer (AO) and the Dispute Resolution Panel (DRP), however, held that the income was taxable in India, classifying it as royalty under Section 9(1)(vi) and FTS under Section 9(1)(vii) of the Act. They also denied GoDaddy the benefits of the India-USA DTAA, asserting that as a Limited Liability Company (LLC), GoDaddy was fiscally transparent in the USA and not “liable to tax” in its own hands, thus not qualifying as a resident under Article 4 of the DTAA. GoDaddy contested this, arguing it had no Permanent Establishment (PE) in India, meaning business profits were not taxable in India under Article 7 of the DTAA. They also contended that their services were automated and standard, not technical or managerial, and did not involve the transfer of any copyright or intellectual property, therefore not constituting royalty or FTS. GoDaddy relied on a previous ITAT decision in its own case for the assessment year 2012-13, which had held similar services were not taxable as royalty or FTS.
