Delhi High Court Stays Income Tax Reassessment Against GoDaddy Over 'Over-Zealous' Approach Of AO

The Division Bench of Justices Dinesh Mehta and Rajneesh Kumar Gupta observed that the AO had “ignored objectivity and basic tenet of tax adjudication system, being certainty and finality of the assessment proceedings.”

GoDaddy's counsel submitted that the company merely acts as a registrar providing domain registration services to Indian customers. It neither owns the domain names nor holds any proprietary or licensing rights in them.

It was argued that in the absence of ownership of the domain names, GoDaddy cannot confer any right to use or transfer the right to use such domain names to customers or other entities.

The counsel cited High Court's ruling in GoDaddy's own case concerning Assessment Years 2013-14 to 2015-16, where it was held that income earned from customers for getting their domain names registered could not be treated as “royalty” under Section 9(1)(vi) of the Income Tax Act, 1961.

For subsequent assessment years, ITAT had held that such receipts constituted Fee for Technical Services.

It was submitted that the Revenue had not challenged those orders and the findings had therefore attained finality.

The Court was also informed that in an incidental matter concerning issuance of a certificate under Section 197 of the Income Tax Act, the High Court had in February 2026 directed the competent authority to issue a certificate at nil rate, subject to the caveat that no Permanent Establishment (PE) was found.

Despite this, GoDaddy submitted that AO initiated proceedings under Section 148. The company contended that its detailed objections, along with the earlier judgments, were brushed aside and rejected through an order dated June 30, 2026 under Section 148A(3).

The company argued that the reassessment proceedings were without jurisdiction and amounted to a change of opinion, particularly as its tax position had been examined year after year, including through scrutiny assessments under Section 143(3) of the Income Tax Act.

After hearing the parties, the High Court observed:

“We are of the view that the Assessing Officer is proceeding in the matter with an over-zealous approach, being guided by revenue considerations.”

As such, it stayed the proceedings till the next date of hearing.

The matter has been listed for January 20, 2027.

For Petitioner: Senior Advocate Sachit Jolly, with Advocate Sohum Dua

For Respondents: Siddhartha Sinha, SSC.