Fee received for registration of domain name of third party cannot be treated as royalty

Godaddy.Com LLC Vs ACIT (Delhi High Court)

Delhi High Court held that Godaddy.com (appellant) had granted rights in or transferred the right to use its domain to a third party. Therefore, the fee received by Godaddy.com for registration of domain name of third parties cannot be treated as royalty.

Facts-

AO proposed an addition concerning the income of the appellant/assessee received against domain name registration services offered to its customers by construing the same as royalty. In this context, the draft assessment order alluded to Section 9(1)(vi) of the Act. Being aggrieved, the appellant/assessee preferred objections qua the same before the Dispute Resolution Panel. The DRP sustained the view taken by the AO in the assessment order and, thus, rejected the objections raised by the appellant/assessee.

Resultantly, the AO passed a final assessment order du/s. 143(3) read with Section 144C(13) of the Act, in line with the directions issued by the DRP. In sum, via the final assessment order, the AO made an addition to the income of the appellant/assessee concerning the fee received qua registration of domain names by treating the same as royalty.

Please become a Premium member. If you are already a Premium member, login here to access the full content.