TMI Blog2019 (10) TMI 310X X X X Extracts X X X X X X X X Extracts X X X X ..... ave to join the queue, in order to obtain an order of remand to DRP, would be unjustified. Significantly, no prejudice would be caused to the Revenue, as the Petitioner is only seeking correction of a jurisdictional error. Thus, if the Petitioner was to succeed in the present petition, it would only result in an order remitting the matter to DRP to decide afresh; in which eventuality, DRP would be entitled to deal with the objections in accordance with law. Whether the writ petition raises an issue that would invite the exercise of jurisdiction by the Court at this stage? - HELD THAT:- The DRP has, instead, blindly followed the decision of GoDaddy.com LLC [ 2018 (4) TMI 390 - ITAT DELHI] and [ 2018 (7) TMI 1809 - ITAT DELHI] and held that the Web Hosting Services are interlinked with domain registration and are ancillary and subsidiary to the application or enjoyment of the right for which payment is received as royalty. Since the payment so received is considered as royalty, the payments received for Web Hosting Services are also considered as Royalty under Section 9(1)(vi) of the Income Tax Act, 1961. It is starkly noticeable that the main contention, or to say the basic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whereby server spaces are given on lease/hire to clients. 5. For AY 2016-17, Respondent No. 2 [Assistant Commissioner of Income Tax, Circle Int. Tax. 2(2)(2)] passed a draft assessment order, dated 31 st December 2018, under Section 144C of the Income Tax Act, 1961 (hereinafter the Act ), holding that the Petitioner s income arising from Domain Name Registration Services and Web Hosting Services is taxable under the provisions of the Income Tax Act, 1961 and also under the India-UAE, Double Taxation Avoidance Agreement( DTAA ). The Petitioner, being aggrieved by the said order filed its objections before the DRP, inter alia objecting that its income arising out of domain name registration services and web hosting services are not taxable under the India-UAE, DTAA. 6. The DRP, after evaluating the draft assessment order and the decisions relied upon therein passed the following order: 3.2 We have considered the factual and legal arguments of the assessee. On perusal of the draft assessment order, it is gathered that the AO has primarily relied upon the order of the Ld. ITAT, Delhi in the case of GoDaddy.com LLC (ITA No.No.1878/Del/2017 (A.Y 2013-14) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , whereby the assessment order passed by AO in pursuance of the DRP directions can be challenged in appeal before the ITAT, the Petitioner cannot be allowed to file the present petition. He also contends that no assessee can be aggrieved merely by the directions of the DRP, since it does not culminate into an order until the AO incorporates it and passes an assessment order. He further contends that the assessee had the option to either approach the DRP against the draft assessment order, or file an appeal before the CIT(A). The Petitioner having elected to subject himself to jurisdiction of the DRP under Section 144C(5) of the Act, against which no right of appeal has been provided under the Act, it cannot prefer a writ petition to assail the said order. Reliance has also been placed on the judgment of the Supreme Court in Mumbai International Airport Ltd. v. Golden Chariot Airport, (2010) 10 SCALE 69. 8. We have heard the learned counsels for the parties at length and given due consideration to their contentions. 9. The main thrust of Respondent s argument pertains to objection of maintainability of the present writ petition on the ground of alternative effi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0. The exercise of the discretionary jurisdiction under Article 226 has been a subject matter of several decisions of the Supreme Court and also of this Court. The Courts have repeatedly held that no limitation can be placed on the powers of the High Court in exercise of its writ jurisdiction. The power of the High Court under Article 226 of the Constitution of India cannot be circumscribed by strict legal principles. At the same time, there is no gainsaying that this discretionary jurisdiction is not absolute. This necessarily means that the Courts have to exercise the power under Article 226 judiciously, in the facts of a case and in accordance with law. Normally, a writ petition under Article 226 is not entertained, if alternate statutory remedy is available. The Supreme Court in CIT v. Chhabil Das Aggarwal (2014) 1 SCC 603, held as under: 15. Thus, while it can be said that this Court has recognised some exceptions to the rule of alternative remedy i.e. where the statutory authority has not acted in accordance with the provisions of the enactment in question, or in defiance of the fundamental principles of judicial procedure, or has resorted to invoke the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer as provided under Section 144C(ii) of the Act. Sub-Section (5) of Section 144 provides that the Dispute Resolution Panel shall issue such directions as it thinks fit for the guidance of the Assessing Officer to enable him to complete the assessment. This, however is subject to consideration of the attributes provided under Sub-Section (6) of Section 144C. Sub-Section (7) of Section 144 further provides that the Dispute Resolution Panel may, before issuing any directions referred to in Sub-Section (5), make such further enquiries as it thinks fit or cause further enquiry to be made by the Income Tax Authority and report the result of the same to it. Sub-Section (10) of Section 144C contemplates that every direction issued by the Dispute Resolution Panel shall be binding upon the Assessing Officer. Thus, the statutory scheme provided, clearly contemplates that Dispute Resolution Panel has an obligation to examine the dispute raised by the assessee to draft assessment order, by taking into consideration all the material and contentions furnished by the assessee. The DRP is required to evaluate and analyse in an objective manner, the records, material and evidence furni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istration as Royalty. If this plea of the Petitioner is not even looked at/ examined by the DRP, it would tantamount to a jurisdictional error. To relegate the Petitioner to the appellate remedies, where he would have to join the queue, in order to obtain an order of remand to DRP, would be unjustified. Significantly, no prejudice would be caused to the Revenue, as the Petitioner is only seeking correction of a jurisdictional error. Thus, if the Petitioner was to succeed in the present petition, it would only result in an order remitting the matter to DRP to decide afresh; in which eventuality, DRP would be entitled to deal with the objections in accordance with law. 15. Having noted the above, the next question that falls for consideration is whether the writ petition raises an issue that would invite the exercise of jurisdiction by the Court at this stage. 16. There is no dispute that Respondent No. 2 passed a draft assessment order dated 31st December 2018 under Section 144C of the Act holding that the Petitioner s income arising from domain name Registration Services and Web Hosting Services is taxable under the provisions of the Income Tax Act 1961 and also u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Act, 1961. It is starkly noticeable that the main contention, or to say the basic argument, raised by the Petitioner with respect to the nontaxability of its income under India-UAE DTAA has not been noticed or discussed, much less adjudicated upon. 18. The case of the Petitioner is essentially that the definition of Royalty under the Act is wider than that provided in the Treaty. Petitioner s contention is that under the Act transfer of rights in property similar to trademark is also covered, whereas under the Treaty, only the transfer of right to use trademark is covered and not similar rights or rights in property similar to trademark . This Court, at this stage, is not expressing any view on the merits of the aforesaid objection as it is for Respondent No. 1 to consider, evaluate and analyse the same, while exercising the power under Section 144C of the Act. However, we cannot gloss over the fact that this elementary argument of the Petitioner has not been dealt with at all in the impugned directions. Further, it also cannot escape our attention that the decision of ITAT Delhi in GoDaddy.com LLC (supra) - which forms the basis of the impugned directions, has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia in respect of, any data, documentation, drawing or specification relating to any patent, inventions, model, design, secret formula or process or trade mark or similar property, if such income is payable in pursuance of an agreement made before the 1st day of April 1976 and the agreement is approved by the Central Government: [Provided further that nothing contained in this clause shall apply in relation to so much o the income by way of royalty as consists of lump sum payment made by a person, who is a resident, for the transfer of all or any rights (including the granting of a licence) in respect of computer software supplied by a non-resident manufacturer along with a computer or computer-based equipment under any scheme approved under the Policy on Computer Software Export, Software Development and Training, 1986 of the Government of India). 19. Respondent No. 1 has evidently not taken note of the aforesaid aspect and has relied upon the decision of the ITAT, in GoDaddy.com LLC (supra) to uphold the action of AO to treat the receipts on account of domain name registration charges as royalty under Section 9(1)(vi) of the Act. Whether or not, the said dis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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