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Decision of the Income Tax Appellate Tribunal in India vs Google India Private Limited, Oct. 2022

Income Tax Appellate Tribunal, 1513/Bang/2013, 1514/Bang/2013, 1515/Bang/2013, 1516/Bang/2013


Google Ireland licences part Google AdWords technology to Google India Private Pvt. In the periods contested, between 2007-2008 and 2012-2013, the withholding tax was not considered and applied to the payment of royalties from Google India to Google Ireland.

The tax authorities assessed this conduct as tax evasion and fined Google the amount of USD 224 Mil.

Google Appealed the order to pay the fine to the High Court of Karnataka (Income Tax Appellate Tribunal Section or “ITAT”) for re-examination.

The ITAT in India found that despite the duty of Google India to withhold tax at the time of payment to Google Ireland,


The case was appealed by Google to the High Court, where the case was remanded to the Income Tax Appellate Authority for re-examination.


After re-examining the matter on the orders of the Karnataka High Court, the Income Tax Appellate Authority concluded that the payments made by the Google India to Google Ireland between 2007-08 and 2012-13 could not be classified as royalties and therefore not subject to withholding tax.


One of the main reasoning according to Court, there was not an effective transfer of rights from Google Ireland to Google India as “none of the rights as per section 14(a)/(b) and section 30 of the Copyright Act, 1957 have been transferred by Google Ireland to the assessee in the present case”. The Court upheld that the “mere use of or right to use a computer program without any transfer of underlying copyright” cannot satisfy the definition of Royalty under the India-Ireland DTAA.


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