Case Law Details
PDR Solutions FZC Vs DCIT (ITAT Mumbai)
ITAT Mumbai held that in absence of rights in the domain name, receipt from domain name registration doesn’t fall in the category of royalty as defined under Article 12(3) of India-UAE DTAA.
Facts- The assessee is incorporated in United Arab Emirates and is a tax resident of UAE. The assessee is engaged in the business of web presence and sale of domain name of global customers.
AO held that the assessee is giving the client right to use its domain name for a fixed period and for a fixed amount of time. Further, the assessee is not selling the domain name but registering or renewing it, which clearly indicates that the assessee as a domain name services provider is the owner of the domain name and it is only providing the right to use the domain name to its clients. Accordingly, the AO treated the sum of Rs. 27,41,96,969 received by the assessee on account of domain name registration as royalty under the provisions of the Act as well as the India UAE Double Taxation Avoidance Agreement (DTAA) and added the same to the total income of the assessee.
DRP passed the impugned final assessment assessing the income from domain name registration as royalty. Being aggrieved, the assessee has preferred the present appeal.
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