GoDaddy Reassessment Stayed Over “Over-Zealous” AO Approach: Delhi HC

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”: Delhi High Court

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.