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2023 (2) TMI 496 - AT - Income TaxIncome deemed to accrue or arise in India - Chargeability of receipt from domain name registration as royalty under the domestic law as well as India-USA Double Tax Avoidance Agreement (DTAA) - HELD THAT:- We are of the humble opinion that the ratio laid down in the aforesaid decision cannot be made applicable to the facts of assessee’s case as the inter-se dispute between the parties is with regard to registration of certain domain names. While deciding the dispute between the parties the Hon’ble Court has observed that the domain names are typically never owned. However, we are confronted with a situation of chargeability of consideration received as royalty in terms of Section 9(1)(vi) of the Act. Section 9(1)(vi) defines royalty and as per the said definition, right to use of trade mark also qualifies as royalty. In the case of Hindustan Unilever Ltd. v. Endurance Domains Technology LLP & Ors. [2020 (6) TMI 818 - BOMBAY HIGH COURT] the Hon’ble Court never had an occasion to examine the issue qua the definition of royalty as per Section 9(1)(vi) of the Act. On a query from the Bench in course of hearing, learned counsel appearing for the assessee fairly submitted that domain name is in the nature of a trade mark under the Trade Mark Act, 1999. Therefore, based on the decision in the case of Hindustan Unilever Ltd. v. Endurance Domains Technology LLP & Ors. [2020 (6) TMI 818 - BOMBAY HIGH COURT] the decisions of the Coordinate Benches in assessee’s own case for assessment years 2013-14 and 2014-15 cannot be declared as per incuriam, more so, when the Hon’ble Jurisdictional High Court is seized of the matter by admitting the substantial question of law on the issue in these assessment years. Thus, the issue in dispute as off now, stands concluded against the assessee by virtue of the decisions of the Tribunal in its own case in assessment years 2013-14 and 2014-15 as discussed earlier. Therefore, in absence of any material difference in factual position in the impugned assessment year and having regard to judicial discipline and propriety, we do not find any valid reason not to follow the earlier decisions of the Tribunal in assessment years 2013-14 and 2014-15. Thus, in assessee’s own case [2018 (4) TMI 390 - ITAT DELHI] And [2018 (7) TMI 1809 - ITAT DELHI] we hold that the consideration received by the assessee from registration of domain names is in the nature of royalty under section 9(1)(vi) of the Act and is taxable as such. Ground is dismissed. Treating the income from web hosting services as FTS under section 9(1)(vii) of the Act as well as Article 12(4)(a) of the India-USA Tax Treaty - HELD THAT:- AO has treated it as FTS/FIS under section 9(1)(vii) read with Article 12(4)(a) of the Tax Treaty, on the reasoning that such services are ancillary and incidental to the domain name registration services rendered by the assessee, the consideration received from which is in the nature of royalty. It is observed, identical issue came up for consideration before the Coordinate Bench in assessee’s own case in assessment year 2013-14. Since the issue did not have any tax implication, the ground was not pressed. Similar decision was taken in assessment year 2014-15 as well. We have held that the consideration received by the assessee from domain name registration services is in the nature of royalty. In our view, the amount received by the assessee from web hosting services is ancillary to domain name registration services. That being the position emerging on record, the amount received has to be treated as FTS. In any case, the assessee has not contested the issue in assessment year 2013-14 and 2014-15 as the issue is of mere academic interest considering that the tax rate of royalty and FTS under the Act is similar. The situation is no different in the impugned assessment year. Thus, we do not find any reason to interfere with the decision of the departmental authorities. The grounds are dismissed.
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