Google India has lost its six year old battle with the Indian tax office. As per reports, Google India faces taxation on Rs 1,457 crore of revenue transacted between 2007-08 to 2012-13 from Google India to Google Ireland.
In a report by The Economic Times, the Income Tax and Appellate Tribunal (ITAT), Bengaluru has dismissed the appeal of Google India. The ITAT, Bengaluru had sent a notice to Google India questioning the transactions made from Google India to Google Ireland as ad revenues.
According to the ITAT, as reported by ET, Google India had appealed that it was using only customer data and intellectual property rights for rendering services to Information technology-enabled Services. Moreover, the money was paid by Google India to Google Ireland. According to ITAT, Bengaluru, Google India is supposed to deduct TDS (tax deducted at source) for both residents and non- residents. Since no such provisions were made for the non-residents, it was concluded that it was done to evade taxes.
The tribunal has also dismissed double taxation avoidance agreement clause as well. Google India is a subsidiary arm of Google International LLC, US. It uses the patented technology from Google Ireland. And since it was contracted in India, the taxation was treated as royalty.
The appeal made by Google India between 2007-08 to 2012-13, were dismissed by the Income Tax Appellete Tribunal (ITAT). The ET report has quoted the ITAT, saying “…the intention of the assesse (Google India) as well as of the GIL (Google Ireland) is clear and conspicuous that they wanted to deduct the tax at the time of payment to GIL, no tax was deducted nor any permission was sought for paying the amount (sic).”
Similarly, international bodies like European Union were also considering to raise tax bills of multinational digital giants like Google, and Amazon to tighten its grip over such companies in matters of taxation. Earlier this year, Google was charged with antitrust record fine of $2.7 billion by the European Union for anti-competitive practices.