Google Funds to Eire Outfit Not Royalty, Not Topic to Withholding Tax, ITAT Says

Google India was granted reduction on Friday because the Revenue Tax Appellate Authority (ITAT) mentioned the funds made by the corporate to Google Eire between 2007-08 and 2012-13 weren’t royalties and had been therefore not topic to withholding tax. The Bengaluru-bench of the ITAT handed the ruling after re-examining the matter on the orders of the Karnataka Excessive Courtroom. The case pertains to whether or not funds totalling Rs 1,457 crore made by Google India to Google Eire is a royalty and whether or not the tax was to be withheld in India.

The ITAT in its earlier order in 2018 had held that Google India’s fee to Google Eire is royalty and tax needs to be paid in India. Nevertheless, Karnataka Excessive Courtroom directed ITAT to re-examine the matter.

In its contemporary ruling dated October 19, 2022, the ITAT put aside its 2018 order and mentioned that such switch of cash was not a royalty.

Permitting the enchantment of Google India, the ITAT, in a 72-page order dated October 19, mentioned, “we maintain that the impugned fee can’t be characterised as royalty underneath the India-Eire DTAA.” An electronic mail despatched to Google India for touch upon the problem didn’t elicit a response.

The ITAT ruling comes a day after Google was hit with a Rs. 1,337.68 crore penalty, imposed by the Competitors Fee of India (CCI) for abusing its dominant place in a number of markets in relation to Android cellular gadgets.

The CCI’s penalty quantity of Rs. 1,337.68 crore imposed on Google is “provisional”, the regulator mentioned, because it has requested the web main to furnish requisite monetary particulars because the knowledge was not introduced in a dependable method.

The penalty of Rs. 1,337.76 crore interprets to 10 % of Google’s common of related turnover for the final three previous monetary years 2018-19, 2019-2020 and 2020-21.

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