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Sum paid by Google India to Google-Ireland under ‘Adwords Advt. programme’ taxable as royalty

May 11, 2018[2018] 93 taxmann.com 183 (Bangalore - Trib.)

IT/ILT : Assessee-Google India made payments to Google Ireland in relation to purchase of advertisement space for resale to the advertisers in India under the Google AdWords Reseller Agreement. Under AdWord Distributor Agreement and the Service Agreement Google India was licenced to use the trade marks, IPRs, brand features, derivative works and other intangibles etc, owned by Google Ireland though it may not be transferred in favour of Google India. Therefore, the consideration paid by Google India is on account of usage of all these intangibles in order to provide better services to Google Ireland or to the advertisers and is certainly in the nature of payment of royalty and is chargeable to tax under section 9(1)(vi) and under article 12 of the DTAA between India and Ireland. Since Google India has not deducted the tax at source as per provisions of section 195, Google India was rightly held to be in default under section 201(1)

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