Google Payments to Ireland Outfit No Royalties, No Withholding Tax, ITAT Says

Google India got relief on Friday when the Income Tax Appellate Body (ITAT) said the payments the company made to Google Ireland between 2007-08 and 2012-13 were not royalties. rights and is therefore not subject to withholding tax. ITAT’s Bengaluru board approved the ruling after reviewing the matter by order of the Karnataka High Court. The case concerns whether payments totaling Rs 1,457 crore made by Google India to Google Ireland are royalties and whether the tax is deductible in India.

The ITAT in the previous order in 2018 stipulated that the payment by Google India to Google Ireland was royalty and tax to be paid in India. However, the Karnataka High Court directed the ITAT to re-examine the matter.

In its new ruling on October 19, 2022, ITAT placed its 2018 order and said such transfers were not royalty.

Allowing Google India’s appeal, ITAT, in its 72-page order of October 19, said, “we consider that the payment involved cannot be considered royalties under the India-Ireland DTAA .” An email sent to Google India for comment on the matter did not receive a response.

The ITAT ruling comes a day after Google fined Rs. 1,337.68 crore penalty, imposed of the Competition Commission of India (CCI) for abusing its dominant position in many markets related to Android mobile devices.

The CCI fine amount is Rs. 1,337.68 crore imposed on Google as “temporary”, the regulator speakas it asked the internet specialist to provide the necessary financial details as the data was not presented reliably.

Penalty of Rs. 1,337.76 crore is equivalent to 10% of Google’s average relevant revenue for the previous three financial years 2018-19, 2019-2020 and 2020-21.

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