The Income Tax Appellate Authority (ITAT) said the payments made by Google India to Google Ireland between 2007-08 and 2012-13 is not a royalty. So, it is not subject to withholding tax in India, ITAT added. 

Reportedly, the verdict was passed by the Bengaluru-bench of ITAT after re-examining the matter on the orders of the Karnataka High Court.

The case relates to whether payments totalling INR 1457 Cr made by Google India to Google Ireland is a royalty and tax is to be withheld in India.

“We are pleased that the Income Tax Appellate Tribunal through its detailed and reasoned order has confirmed the distinction between royalty and business profits,” the company said as quoted in the reports.

The spokesperson added that the company pays all of the applicable taxes due and comply with the tax laws in India. 

Earlier in 2018, ITAT ruled that Google India’s payment to Google Ireland is royalty and tax should be paid in India. Later, the Karnataka High Court directed ITAT to re-examine the issue.

Now, in its latest order released last week, ITAT set aside its 2018 order. “We hold that the impugned payment cannot be characterised as royalty under the India-Ireland DTAA,” it said.

Recently, the Competition Commission of India (CCI) slapped a penalty of INR 1,337.76 Cr on Google for its anti-competitive practices for abusing its dominant position in the Android devices market. 

The competition watchdog also issued a cease and desist order directing Google to modify its conduct within a defined timeline.

“The CCI’s decision is a major setback for Indian consumers and businesses, opening serious security risks for Indians who trust Android’s security features, and raising the cost of mobile devices for Indians,” a Google spokesperson said.