PRINCIPAL COMMISSIONER OF INCOME TAX (INTERNATIONAL TAX)-1 vs. GODADDY.COM LLC

ITA 751/2023

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$~34 * IN THE HIGH COURT OF DELHI AT NEW DELHI

Decision delivered on: 13.12.2023 + ITA 751/2023 & CM Nos.64362-63/2023

PRINCIPAL COMMISSIONER OF INCOME TAX (INTERNATIONAL TAX)-1

..... Appellant Through: Mr Sunil Agarwal, Sr Standing Counsel with Mr Shivansh B. Pandya, Standing Counsel and Mr Utkarsh Tiwari, Adv.

versus

GODADDY.COM LLC

..... Respondent Through: Mr Prakash Kumar and Ms Rashmi Singh, Advs.

CORAM:

HON'BLE MR. JUSTICE RAJIV SHAKDHER

HON'BLE MR. JUSTICE GIRISH KATHPALIA

[Physical Hearing/Hybrid Hearing (as per request)]

RAJIV SHAKDHER, J. (ORAL): 1. This appeal concerns Assessment Year (AY) 2014-15. 2. Via the instant appeal, the appellant/revenue seeks to assail the order dated 26.05.2023 passed by the Income Tax Appellate Tribunal [in short, “the Tribunal”]. 3. In the instant appeal, the Tribunal was called upon to adjudicate the legal tenability of two separate orders dated 30.09.2019 passed by the Commissioner of Income Tax (Appeals) [in short, “CIT(A)”], whereby, he had deleted the penalty amounting to Rs. 1,97,31,721/- and Rs. 4,95,98,366/-, levied under Section 271(1)(c) of the Income-tax Act, 1961 Digitally Signed By:PREM MOHAN CHOUDHARY Signing Date:21.12.2023 17:10:54 Signature Not Verified

ITA 751/2023

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[in short, “the Act”], for AY 2013-14 and AY 2014-15. 4. It is not in dispute that CIT(A) deleted the penalty imposed by the AO, in view of the quantum appeals preferred before this Court concerning AYs 2013-14, 2014-15, 2015-16. 5. The Tribunal, while disposing of the appeal against the aforementioned orders of the CIT(A), had made the following observations: “8. We have heard the Ld. Representative of the parties and perused the material on records. We have also considered the decision of the Hon‟ble Delhi High Court in Liquid Investment and Trading Co. (supra) and decision of Indore Bench of the Tribunal in Yugal Kishore Jajoo (supra) relied upon by the assessee. It is an undisputed fact that the assessee earned revenues from two streams i.e. web hosting and domain registration charges and offered revenue from web hosting services to tax in the return filed for the relevant AYs. However, the assessee did not offer to tax its income from domain registration services for the reason that it was under a bonafide belief that this income is not chargeable to tax under the provisions of the Act. The said income has been held to be taxable as “royalty” by the appellate authorities including the Tribunal in the quantum appeal of the assessee. In this view of the matter, the Ld. AO imposed the impugned penalty which was deleted by the Ld. CIT(A) for the detailed observations and findings recorded by him in his appellate order(s) with which we are inclined to agree.

ITA 751/2023

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The other AYs qua which the appeals were filed were AYs 2013-14, 2014- 15 and 2015-16. 6.2 Insofar as these appeals were concerned, the question of law, as framed, was answered in favour of the respondent/assessee and against the appellant/revenue. 7. The question of law framed and answered by this Court in ITA No. 891/2018 [AY 2013-14]; ITA No. 261/2019 [AY 2014-15] and ITA No. 75/2023 [AY 2015-16] reads as follows: “Whether on the facts of the case and in law, the Income Tax Appellate Tribunal [in short, “Tribunal”] erred in holding that the income received by the appellant as a consideration for providing domain name registration services amounted to „royalty‟ under Section 9(1)(vi) of the Income Tax Act, 1961 [in short, “Act”]?”

RAJIV SHAKDHER, J

GIRISH KATHPALIA, J

DECEMBER 13, 2023/aj Digitally Signed By:PREM MOHAN CHOUDHARY Signing Date:21.12.2023 17:10:54 Signature Not Verified