By TIOL News Service

NEW DELHI, JAN 18, 2018: THE issue is - Whether subscription fees charged by trade regulatory bodies, for assigning domain name registration, can be brought to tax as 'commercial receipts'. NO is the verdict.

Facts of the case:

The Assessee-company is engaged in general public utility services. During the relevant year, the Assesse had charged subscription and other fees towards various services provided by it. This activity attracted the attention of AO, who opined that the said charges were in the nature of commercial activity and therefore, fell outside the charitable objects for which it was established. On appeal, the CIT(A) held that that such receipts were essentially commercial in nature and did not fall within the description of charitable activity and hence, set aside the findings of AO.

Tribunal held that,

++ it is seen that both the appellate authorities have concluded that the Assessee's objects are charitable; it provides basic services by way of domain name registration, for which, it charges subscription fee on annual basis and also collects connectivity charges. In addition, the Assessee is the only nationally designated entity entitled to allocate domain names to its applicants who seek it in India. Apparently, it is also an affiliate national body of the ICAMM and authorized to assign "in" registration and domain names in terms of Central Government's letter. In that sense, the Assessee though not a statutory body, is carrying on regulatory work. It's case would therefore be a fortiori on a different footing than Chamber of Commerce, and other such trade bodies, set up not for profit basis but should have been held to be charitable organizations such as Bureau of Indian Standards, ICAI Accounting Research Foundation, etc.

(See 2018-TIOL-103-HC-DEL-IT)