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In this case, clients desirous of services apply to assessee who in turn enquires from ICANN availability of domain name. On confirmation, assessee registers the clients for fees and for conditions as imposed by ICANN.

As already mentioned, Godaddy US is a registrar of the customers who need these services and provide the services to its customers. And ICANN is the central organisation who appoints such registrar like Godaddy US and charge fee from Godaddy under a fixed predetermined formula.

The clients all over the worlds apply for services as per Proforma given by the assessee and pay fees for the same. One part of the fees is allegedly received by the Godaddy for web-hosting which is being offered for tax under royalty by the assessee and the other part is taken for domain name registration. A fixed percentage of the latter is given by the assessee to the ICANN.

6.4 Taxability as Royalty As per the section 9(1)(vi) of the act :

Explanation 2. - For the purposes of this clause, "royalty" means consideration (including any lump sum consideration but excluding any consideration which would be the income of the recipient chargeable under the head "Capital gains") for -
Equipment : supplies or tools needed for a special purpose or the act of equipping someone or something Scientific : of or relating to science or done in an organized way that agrees with the methods and principles of science.
In the instant case, the customers of Godaddy are using the server of the assessee and paying the fees for the same, as domain name registration is a tool which equips the customer with the right to use the server of Godaddy and web hosting charges are ancillary and subsidiary to the application or enjoyment of the right, property or information for which a payment of domain registration fee is received.

17. In the result, the appeal of the assessee is dismissed.

Decision pronounced in the open Court on 03.04.2018. 

                  Sd/-                                   Sd/-
       (SUCHITRA KAMBLE)
                  KAMBLE)                          (G.D. AGRAWAL)
                                                         AGRAWAL)
        JUDICIAL MEMBER                               PRESIDENT

VK.

Copy forwarded to: -

1.    Appellant   : M/s Godaddy.com LLC,
                    C/o Godaddy India Domains &