Tax Tribunal Rejects Penalty Appeal; Domain Registration Income Not "Royalty" Under Tax Law for 2013-14 & 2014-15.

The Tribunal dismissed the appeal concerning the penalty levied under Section 271(1)(c) of the Income Tax Act, 1961, for AY 2013-14 and AY 2014-15. The Tribunal noted that the respondent/assessee had succeeded in related quantum appeals where the court ruled that income from domain name registration services did not constitute "royalty" under Section 9(1)(vi). Consequently, the penalty could not be upheld. The appeal was closed, and the application for condonation of delay was deemed inefficacious. Parties were directed to proceed based on the digitally signed order.

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Issues involved:
The appeal concerns Assessment Year (AY) 2013-14. The Tribunal was called upon to adjudicate the legal tenability of two separate orders dated 30.09.2019 passed by the Commissioner of Income Tax (Appeals) [CIT(A)] concerning penalty levied under Section 271(1)(c) of the Income Tax Act, 1961 for AY 2013-14 and AY 2014-15.

Details of the Judgment:
The Tribunal observed that the issue involved in the appeal was debatable and the position in law was not settled. The Tribunal considered the fact that the quantum appeal was pending in the court. The respondent/assessee had filed quantum appeals for AY 2013-14, AY 2014-15, and AY 2015-16. The question of law framed and answered by the court in those appeals was whether the income received for providing domain name registration services amounted to "royalty" under Section 9(1)(vi) of the Income Tax Act, 1961. The court answered in favor of the respondent/assessee in those appeals.

Given that the respondent/assessee succeeded in the quantum appeals, the penalty imposed in the instant appeal could not be sustained. Therefore, the impugned order required no interference, and the appeal was closed. The application for condonation of delay was rendered inefficacious and closed. Parties were instructed to act based on the digitally signed copy of the order.

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