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

May 11, 2018[2018] 93 183 (Bangalore - Trib.)/[2018] 194 TTJ 385 (Bangalore - Trib.)

IT/ILT: Where assessee-Google India made payment to Irish company-GIL for purchasing of advertisement space under Google-USA's Adwords programme for resale to advertisers in India as also for post-sales services that included usage of trademarks, IPRs, brand features, derivative works and other intangibles owned by Irish company GIL, consideration so paid would be royalty liable to tax under section 9(1)(vi)

IT/ILT: Where Adwords programme owned by Google USA were licensed successively to parent holdings of assessee-Google India and finally distribution rights were given to assessee-Google India, presumably revenue generated was to be distributed among all; in absence of agreements between parent holdings, it could not be ascertained as to whether assessee was beneficial owner of receipt liable to TDS at rate of 10 per cent under article 12 of Indo-Irish DTAA or at 10.56 per cent under IT Act

IT/ILT: Profit Split Method (PSM) can be adopted as most appropriate method in cases involving multiple inter-related international transactions which cannot be evaluated separately

IT/ILT: Where no factual foundation was laid before Tribunal or lower authorities as to how assessee-company entertained bona fide belief that it had no TDS obligation, section 40(a)(ia) disallowance was to be made

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