Domain name registration receipts treated as royalty where services were connected with use of an intangible asset akin to a trademark.

Receipts from domain name registration were treated as royalty under section 9(1)(vi) because a domain name was viewed as an intangible asset akin to a trademark. The Tribunal applied Explanation 2 to section 9(1)(vi) and held that services connected with the use of such property fall within the statutory concept of royalty. It followed its earlier decision in the assessee's own case for the preceding year and noted that the ownership objection had already been addressed there. On that reasoning, the receipts were held taxable as royalty and the issue was decided against the assessee.

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Issues: Whether receipts from domain name registration were taxable as royalty under section 9(1)(vi) of the Income-tax Act, 1961.

Analysis: The domain name registration activity was examined in the light of the statutory definition of royalty, particularly the transfer of rights in, use of, or services connected with a trademark or similar property under Explanation 2 to section 9(1)(vi). The Tribunal followed its earlier decision in the assessee's own case for the preceding year and held that a domain name has the characteristics of an intangible asset akin to a trademark. On that basis, the services rendered in respect of domain name registration were treated as services connected with the use of such property and therefore fell within the statutory concept of royalty. The Tribunal also noted that the assessee's objection on ownership of the domain name had already been dealt with in the earlier year.

Conclusion: The receipts from domain name registration were held taxable as royalty and the issue was decided against the assessee.

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