GODADDY.COM LLC,GURUGRAM vs. ASSISTANT COMMISSIONER OF INCOME TAX, NEW DELHI

IT(IT)A No.112/Del/2026 GODADDY.COM LLC, GURUGRAM IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “D” NEW DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI SANJAY AWASTHI, ACCOUNTANT MEMBER IT(IT)A No.112/Del/2026 Assessment Year: 2023-24 GoDaddy.com LLC, Vs. ASSISTANT COMMISSIONER OF C/o GO Daddy India Domains & INCOME TAX, Hosting Services Private Limited, Civic Centre, Minto Road, The Statesman Baani, 1st Floor, New Delhi, Sector-43, Golf Course Road, Gurgaon, Haryana 122001. PAN No. AAECG7133K Appellant Respondent Assessee by Shri Ravi Sharma, Adv. & Ms. Shruti Khimta, AR Revenue by Shri M.S. Nethrapal, CIT DR Date of hearing: 07.05.2026 Pronouncement on 07.05.2026 O R D E R PER SANJAY AWASTHI, ACCOUNTANT MEMBER: 1. This appeal is filed by the Assessee against the order of Ld. ACIT, Circle-1(3)(1), order dated 16.01.2026 for the Assessment Year 2023-24.

IT(IT)A No.112/Del/2026 GODADDY.COM LLC, GURUGRAM Particulars AMOUNT Offered to Tax (INR) (INR) Income from web hosting 2,17,26,72,460 NIL services. Web designing. SSL certification services and sale on demand products. Domain registration services 3,09,55,37,914 NIL Interest on income tax refund 1,64,327 Offered to tax (B) Total addition proposed by 5,26,83,74,701 the AO In this case, the three broad issues are as under: -

i. The assessee’s claim of being covered under the beneficial provisions of the US-India Double Taxation Avoidance Agreement (hereafter as “DTAA”); ii. The taxability of receipts from domain registration fee as royalty u/s 9(1)(vi) r.w.s. 115A of the Act; iii. The taxability of web hosting charges as Fees for Technical Services (FTS) u/s 9(1)(vii) of the Act.

2.1 The Ld. AO is seen to have brought to tax Rs.309,55,37,914/- as royalty on account of registration fee, which has been considered u/s 9(1)(vi) r.w.s. 115A of the Act. Secondly, the Ld. AO has brought to tax an amount of Rs.217,26,72,460/- by treating the same as FTS u/s 9(1)(vii) of the Act.

2.2 Aggrieved with this action the assessee has approached the ITAT with the following grounds of appeal: -

“GENERAL 1. On the facts and circumstances of the case and in law, the final assessment order dated January 16, 2026, passed by the Ld. Assistant Commissioner of Income Tax Circle 1(3)(1), International Taxation, Delhi ("Ld. AO") under section 143(3) read with section 144C(13) of the Income- tax Act, 1961 ("the Act"), making an addition of INR 5,26,82,10,374/- to

IT(IT)A No.112/Del/2026 GODADDY.COM LLC, GURUGRAM the returned income of the Appellant, is contrary to provisions of the Act and therefore, void-ab-initio. ELIGIBILITY TO AVAIL BENEFIT UNDER INDIA-USA TAX TREATY 2. On the facts and circumstances of the case and in law, the Ld. AO Resolution Panel ("DRP") erred in holding that the Appellant is not entitled to the benefits provided under the Double Taxation Avoidance Agreement ("DTAA") between India and the United States of America ("USA") as the Appellant does not qualify as a tax resident under Article 4 of the India-USA DTAA. TAXABILITY OF INCOME FROM DOMAIN NAME REGISTRATION SERVICES 3. On the facts and circumstances of the case and in law, the Ld. AO as well as the Ld. DRP grossly erred in holding that the Appellant's receipts from domain name registration services amounting to INR 3,09.55.37,914/- be brought to tax as royalty and in doing so, have failed to appreciate: 3.1 that the receipts are not taxable in India under section 9(1)(vi) read with section 115A of the Act. 3.2 that the receipts are not taxable in India under Article 12(3) of the India-USA DTAA. 3-3 that domain name is not a property owned by the Appellant and it could neither be licensed for use or right to use, nor could give rise to any element of royalty for that reason. 3-4 that the domain registration charges is not a consideration for use of any industrial, commercial or scientific equipment. 3.5 the decision pronounced by the Hon'ble Delhi High Court in Appellant's own case (IΤΑ Νοs. 891/2018, ITA 261/2019 and ITA 75/2023) and the Hon'ble Delhi Tribunal in Appellant's own case [ITA No. 1558 to 1561/Del/2022 and 3027/Del/2023 (for AYs 2016-17 to 2019-20 and AY 2021-22) and ITA No. 335/Del/ 2025 (for AY 2022-23)) holding that domain name registration charges cannot be taxed as 'royalty’ under the provisions of the Act which is binding on the Ld. AO. TAXABILITY OF INCOME FROM WEB HOSTING SERVICES ETC. 4. On the facts and circumstances of the case and in law, the Ld. AO as well as the Ld. DRP erred in alleging that the Appellant's receipts from web hosting, sale of on demand products, web designing, SSL certification services etc. amounting to INR 2,17,26,72,460/-be charged to tax as fee for technical services and in doing so, have failed to appreciate:- 4.1 that the receipts are not taxable in India under section 9(1)(vii) read with section 115A 4.2 that the receipts are not taxable in India under Article 12(4) of the India-USA DTAA. 3

IT(IT)A No.112/Del/2026 GODADDY.COM LLC, GURUGRAM 4.3 that the charges received for web hosting services etc., are not ancillary and subsidiary to application or enjoyment of domain registration. 4.4 the decision pronounced by the Hon'ble Delhi Tribunal in Appellant's own's case [ITA No. 1558 to 1561/Del/2022 and 3027/Del/2023 (for AYs 2016-17 to 2019-20 and AY 2021-22) and ITA No. 335/Del/ 2025 (for AY 2022-23)) in Appellant's own case holding that income from web hosting services etc. is not taxable as 'fee for technical services' under the provisions of Article 12(4) of the India-USA DTAA which is binding on the Ld. AO. LEVY OF INTEREST UNDER THE PROVISIONS OF THE ACT 5. On the facts and circumstances of the case and in law, the Ld. AO erred in levying interest under section 234B of the Act.”

3.1 The Ld. DR relied on the impugned order and the findings of the Ld. DRP and stated that the previous years’ orders have not become final and therefore the findings of Ld. AO deserve to be sustained.

IT(IT)A No.112/Del/2026 GODADDY.COM LLC, GURUGRAM is seen that grounds 2, 3 & 4 are the substantive grounds for this year and all these three grounds have been decided in favour of the assessee in the order of ITAT for AY 2022-23. At this stage, we cannot do any better than extracting the relevant portions from the order of ITAT (supra) for deciding the issues under consideration. The relevant extracts from the ITAT’s order pertaining to the grounds for this year are as under: - GOA2 “11. In this context the ld. Counsel has submitted that the issue is no more res integra after the decision of co-ordinate bench in the appellant's sister concern, Wild west domains, LLC v. ACIT (ITA No. 1774/Del/2022) the co-ordinate bench held that fiscally transparent entities are entitled to the benefits of the relevant DTAA where a valid TRC has been issued by the revenue authorities of the concerned jurisdiction. The co-ordinate bench in the assessee's own case in ITA No. 1558 to 1561 /Del/2022 and 3027/Del/2023 wherein the tribunal made a distinction between liability to taxation and actual payment tax. The Tribunal has clarified that liability to taxation refers to the fundamental power to tax an income through the incidence of taxation, which may differ from the actual payment to tax The Co-ordinate bench in the assessee's own case held that: ‘11.8 Ld. Counsel has submitted that in the instant case, it is relevant to note that the Appellant offers various packages to its customers for, hosting their websites on its servers, procure various tools for designing their web pages and avail other web services. Such services remain active for a fixed time period. Upon expiry of such fixed period, the service package is required to be renewed and the users are not permitted to continue using such services on their own. Furthermore, the users are not equipped to apply or deploy such services on their own independently without resorting back to the Appellant. Accordingly, rendition of such services in no manner 'makes available' any technical knowledge, experience, skill, know- how, or processes or involves development or transfer of any technical plan or technical design to the users. 11.9 As with regard to the above, our attention is drawn towards the following judicial precedents wherein it has been opined that the consideration received from provision of web hosting services is not subject to tax as FTS / FIS:-Decision of the coordinate bench of this Tribunal in the case of] Millennium Infocom Technologies Ltd. [2009] 117 ITD 114/[2008] 21 SOT 152 (Delhi) wherein it was opined that

IT(IT)A No.112/Del/2026 GODADDY.COM LLC, GURUGRAM providing of space on the servers by the non-residents for the purpose of hosting of the website will not result in the provision of technical service for a fee and accordingly, such payments cannot be taxed as FTS / FIS in India. Recent decision of coordinate bench of this Tribunal in the case of] Campus Eai India Pvt. Ltd. [TS-631-ITAT-2023(DEL)] wherein, following the decision of Millennium Infocom Technologies Ltd. (supra), it was held that the income from web hosting services do not constitute 'royalty' or FTS as per the provisions of the Act read with India-Mauritius DTAA. Decision of coordinate bench of this Tribunal in the case of Amazon] Web Services, Inc. [TS-419-ITAT-2023(DEL)] wherein it was held that the payments made for cloud computing / AWS services, which inter alia includes cloud hosting, is not taxable as FTS / FIS under the provisions of the Act read with India-USA DTAA. The Tribunal concluded that the AWS services provided by the assessee are standardized services that do not provide any technical services to its customers nor satisfy the 'make available' test as the customer will not be able to make use of the technical knowledge, skill, process etc. used by the assessee in providing cloud services by itself in its business or for its own benefit without recourse to the assessee in future. Decision of Pune Tribunal in the case of ITO vs.M/s Sunguard] Availability Services LLP (ITA No.258/PUN/2021) wherein the Bench held that Cloud Infrastructure Managed Private Cloud and Colocation services provided by the assessee does not satisfy the condition stipulated by Article 12(4)(b) of India-USA DTAA which requires that the services concerned should "make available technical knowledge" to the recipient/payer such that that the payer concerned is independently able to make use of the technical know-how etc. coming from the service provider's side. Decision of Ahmedabad Tribunal in the case of Esm Sys Pvt. Ltd. vs.] ITO [TS-347-ITAT-2020(Ahd)] wherein the Tribunal held that payment of web hosting charges by the Appellant to a USA Co. do not constitute FIS as it does not involve any sharing of knowledge or know-how or any technology or fulfils the 'make available' condition as enshrined in Article 12(4) of the India-USA DTAA. 12. Ld. DR has relied the order of ld. Tax authorities below. 13. After taking into consideration all submissions and the material on record we find that ld. AO has erred in giving a findings that being a LLP the assessee is not eligible for treaty benefits. The law in this regard is quite settled as it is now settled that the term, 'liability to taxation' has to be distinguished from actual payment of taxation. 'Liability to taxation' indicates the powers of taxing an income though the incidence of taxation and actual payment may be different. The reliance of the ld. counsel on the decision of the coordinate bench in the case of Wild West Domains, LLC (supra) certainly takes care of the issue wherein relying the decision of the

IT(IT)A No.112/Del/2026 GODADDY.COM LLC, GURUGRAM Mumbai Bench of the Tribunal in the case Linklaters LLP v. ITO (Int. Taxation) [2010] 40 SOT 51/[2011] 9 ITR(T) 217 and Herbert Smith Freebills LLP v. ACIT (TS 822-ITAT-202 (Del Trib.) the coordinate bench has given benefit of DTAA, irrespective of the fact that the assessee in that case was fiscally transparent entity in USA, like the present assessee. Accordingly, ground No.2 is sustained in favour of the appellant.’ 12. In the back ground of the aforesaid discussions and respectfully following the above decision we hold that the assessee should be qualify as a resident under article 4 of the India-USA DTAA and entitled to avail the benefits under the India-USAA DTAA. Ground raised by assessee is decided in favour of the assessee.” GOA 3 “16. We find that this view has also been affirmed by the Coordinate Bench in ITA No. 1558 to 1561/Del/2022 & ITA No. 3027/Del/2023 Go Daddy. Com, LLC v. ACIT relying the Hon'ble High Court decision in the Assessee's own case for A.Y. 2013-14 to 2015-16 (ITA No. 891/2018, ITA 261/2019 and & 75/2023) wherein, vide order dated 01-012025 it was held that the income earned by the Appellant from providing domain name registration services to Indian customers is not taxable in India under either section 9(1) (vi) of the Act or Article 12(3) of the India-USADTAA. The relevant findings are reproduced as under as under: ‘8. We find that this view has also been affirmed by Hon'ble Delhi High Court in the Appellant's own case for AY 2013-14 to AY 2015-16 (ITA Nos. 891/2018, ITA 261/2019 and ITA 75/2023) wherein, vide order dated December 11, 2023, it has been held that the income earned by the Appellant from assisting customers in registration of domain names cannot be treated as 'royalty' under the provisions of section 9(1)(vi) of the Act itself. The relevant findings are reproduced hereunder: "15.2 A close perusal of the aforementioned clause would show that what is agreed between the appellant/assessee and its customers is that mere registration of a domain name does not create any proprietorship rights in the name used as the domain name or in the domain name registration either in the appellant/assessee or the customers or even any other third party. 15.3 Therefore, the submission advanced on behalf of the appellant/assessee, i.e., that since it is not the domain name's owner, it cannot confer the right to use or transfer the right to use the domain name to another person/entity, deserves acceptance. 16. We are also of the view that passing off and injunction actions are entertained by the Courts where domain name registrations are brought about in bad faith or to perpetuate 7

IT(IT)A No.112/Del/2026 GODADDY.COM LLC, GURUGRAM fraud. The Courts tend to grant injunctive relief where the defendant, in such actions, is seen to be feeding off the plaintiff's goodwill and causing confusion amongst its customers regarding the origin of the subject goods and services. Such reliefs are granted on the basis that the definition of the expression "mark" includes a "name", and in turn, the expression "trademark" so defined to include a mark, distinguishes the goods and services of one person from those of others. Therefore it is possible in a given situation that a domain name may have the attributes of a trademark. [See section 2m read with section 2zb of Trademarks Act, 19991]. 16.1 The Supreme Court, in Satyam Infoway, held that it is the registrant (and not the Registrar) who owns the domain name, and can protect its goodwill by initiating passing off action against a subsequent registrant of the same domain name/a deceptively similar domain name. The observations made in the following paragraphs of Satyam Infoway, being apposite, are extracted hereafter: "What is important for the purposes of the present appeal is the protection given to intellectual property in domain names. A prior registrant can protect its domain name against subsequent registrants. Confusing similarity in domain names may be a ground for complaint and similarity is to be decided on the possibility of deception amongst potential customers. The defences available to a compliant are also substantially similar to those available to an action for passing off under trademark law... What is also important is that the respondent admittedly adopted the mark after the appellant. The appellant is the prior user and has the right to debar the respondent from eating into the goodwill it may have built up in connection with the name... " 16.2 From a perusal of the above, it is clear that the Court in Satyam Infotech was concerned only with the rights of the domain name owner and not the Registrar, while determining whether passing off action can be initiated in relation to domain names. Given this position, the Tribunal's reliance on this judgment is misconceived. 16.3 In this case, however, we need not travel down this path, as the appellant/assessee is only acting as a Registrar and thus offering its services to its customers for having their domain names registered. 16.4 The aforementioned principle may have been attracted if the appellant/assessee had granted rights in or transferred the right to use its domain name, i.e., Godaddy.com, to a third person. Therefore, the fee received by the appellant/assessee for registration of domain names of third parties, i.e., its customers, cannot be treated as royalty.’ The Ld. DR fairly admitted that the issue is covered by the assessee's own case. Respectfully following the decision of the Co-ordinate

IT(IT)A No.112/Del/2026 GODADDY.COM LLC, GURUGRAM bench and ratio decided by the Hon'ble High Court the ground raised by the assessee is decided in favour of the assessee.” GOA 4 “17. Ground No. 5 ld. Counsel for the assessee submitted that during the year under consideration the Appellant had earned income amount to INR 2,04,56,73,793/-from providing services (such as web hosting, web designing, SSL certification services and sale of on- demand products) to Indian customers. He further submitted that domain name registration services are distinct from web hosting services. Domain name registration services involve assisting customers with registration of their domain names whereas web hosting services allow the customers to make their website accessible to users. Whilst these services work together to create a functioning website, they operate independently, and customers have the flexibility to purchase them from different providers based on their specific needs and preference. The webhosting services should not be classified as ancillary and subsidiary to the application or enjoyment of domain registration. He also submitted that appellant is entitled to avail the beneficial provisions of the India-USDTAA. The Co- ordinate bench in the assessee's own case in ITA nO.1558 to 1561/Del/2022 and ITA No. 3027/Del/2023 held that the income from provision of non-domain services (such as web hosting, web designing services etc.) do not make available any technical knowledge, experience, skills, know-how, or processes or result in transfer of any technical plan of technical design to the users. The relevant findings are as under: ‘14. Next we have no hesitation to accept the proposition set up by the ld. Counsel that once ground no. 3 is decided in favour of assessee and the receipts from domain name registration services are held to be not liable to be taxed as royalty income then by alleging them to taxable being ancillary and subsidiary to the application or enjoyment of a right, property or information for which are royalties are received, cannot be accepted. 14.1 In fact it is even questionable that non-domain name services can be ancillary and subsidiary to the application or enjoyment of a right, property or information for domain name services. As for this we need to examine what exactly is scope non-domain service. Here we will like to examine the discussion of the ld. AO on this count and we find that ld. AO on page 15 of impugned order has observed as follows:- "It can be seen that domain registration is an integral part of the services which are offered by the assessee. The assessee in its submissions has not distinguished how domain registration charges are different from web hosting charges, the latter being duly admitted by the assessee itself as royalty which is duly reflected in its return of income. Domain registration partakes the character of web hosting charges since without domain

IT(IT)A No.112/Del/2026 GODADDY.COM LLC, GURUGRAM registration being in place, web hosting is not possible. As domain registration charges have been essentially charged for granting right to use the servers of the assessee, domain registration being the precondition to web hosting etc, and same being highly technical process and because of its inherent quality, the same squarely falls under the definition of royalty under the provisions of the Act and the Double Taxation Avoidance Agreement. Besides, both the services/facilities ie. web hosting and domain name registration flow from the same server, it is only because of the peculiar nature of the two i.e. web hosting and domain name registration fall under different categories i.e. the first under FTS (because it involved high technique and make available condition is fulfilled as discussed earlier) and latter under royalty (because of the right it confers and the equipment it 24 provides as discussed earlier). Here, it is likely that the assessee is not offering receipts from domain registration because it has to pay certain fixed percentage to ICANN which is not being paid by the US Government. However, it is the relationship of assessee and ICANN which should not affect the Indian Revenue in any way. In case, the assessee feels the burden of taxation because of ICANN payments, the assessee should recover the same (tax) payable to India from ICANN." 14.2 The aforesaid findings of ld. AO show a lack of understanding of the nature of non-domain services. Though domain names and web hosting are often purchased together, they are actually two different things. A domain name is the permanent address of a website on the Internet. It's what people type into their web browsers to find a particular website. Purchasing, registering, and using a domain name for a website, will make it much easier for site visitors to remember the entity connected to the domain name. When they enter domain name in their browsers, their computer sends a request to a cluster of servers called the Domain Name System (DNS). We don't really need to know what goes on behind-the-scenes here. The important thing to remember is that the DNS then responds with the IP address of that website's hosting server, which is how people are able to use domain name to reach a website of a particular entity or individual. 14.3 Web hosting is where website files are stored. Hosting is the disk space, bandwidth, and tools used to create and maintain a website. It is like the home of website where it actually lives. A good way to think about this is if the domain name were the address of an individual's house, then web hosting would be the actual house that the address points to. All websites on the internet need web hosting. This web hosting company may be the same company which has provided the domain name or a different company. This computer, also known as a hosting server, contains website's files and sends them back to the users' web browsers. Web hosting companies specialize in storing and serving websites. They provide resources like RAM, bandwidth, and CDN, which help improve the speed and performance of a website. Web server is basically a computer that usually runs websites. It is used to host websites and contain one or more websites. It stores web server software and website's component files. It processes network requests of users and

IT(IT)A No.112/Del/2026 GODADDY.COM LLC, GURUGRAM serves them with files that create web pages. A web host provides multiple web servers to host many different websites, ensuring they are accessible on the internet. One can even set up a web site on two separate servers from two different hosting companies with the same domain just by ensuring that domain names are set up on both servers. 14.4. So the ld. AO has erred in concluding that for web hosting and domain same server of assessee is used and that makes it integrated services. While the fact is that they are entirely different set of services with different set of technical aspects involved in making a web site come live. A person may buy domain and hosting from different providers. It even has benefits like buying domains and hosting from different providers can give you more flexibility and control over your website, as such person is able to choose the best provider for each service. It is sometimes more cost effective, as one may find better deals on either domain or hosting by shopping around. Thus ld. AO has fallen in error to consider web hosting charges and other non-domain services charges as FTS, being ancillary and subsidiary to the application or enjoyment of domain name registration. 15. Next examining the 'make available' aspect we find that same has been sufficiently clarified in various decisions cited before us. It is essential to apply the 'make available' clause that there should be some element of transmitting technical knowledge by which an enduring benefit ensues. However, in a case of purchase of domain name or hosting services or other non-domain name services, there is actually no transmission of technical knowledge and the person acquiring domain name or availing hosting services merely pays for customized services available with the service providers. The customized technology and services of the provider are fairly available to everyone who proceeds to acquire a domain name or pays for web hosting services. There is no transfer of any knowledge or know-how by the service provider which can deliver any enduring benefit to said person. In fact, to make the website operational on the basis of ownership of a domain name and having services of web hosting, the person creating a website has to independently engage its technological inputs which may be unique to the needs of that person in terms of the objectives of the website. 15.1 Thus the income from provision of non-domain services (such as web hosting, web designing services etc.) do not 'make available' any technical knowledge, experience, skill, know-how, or processes or result in transfer of any technical plan or technical design to the users. Accordingly, the consideration received by the Appellant for rendering such services should fall outside the ambit as FIS as per Article 12(4)(b) of the India-USA DTAA. Ground no. 4 is sustained.’ 18. Respectfully following the decision of the Co-ordinate bench, we decided the ground no 5 raised by the assessee in favour of the assessee.”

IT(IT)A No.112/Del/2026 GODADDY.COM LLC, GURUGRAM 5. Respectfully following the earlier years order, grounds 2, 3 & 4 are decided in favour of the assessee. Ground 1 is general and is not specifically adjudicated. Grounds 5 & 6 are consequential and thus, these too are not specifically adjudicated.

Order pronounced in the open court on 07.05.2026

Sd/- Sd/- (VIKAS AWASTHY) (SANJAY AWASTHI) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 19.06.2026 *Kavita Arora, Sr. P.S. Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI