In a relief to Google India, the Karnataka High Court has set aside the Income Tax Appellate Tribunal (ITAT) order related to the Adwords platform (now called Google Ads). It asked the tribunal to hold a fresh hearing at the earliest. The ITAT had held that payments aggregating to Rs 1,457 Cr. made by Google India to its parent firm Google Ireland between 2007-08 and 2012-13 are taxable as royalty. It had held that the payments constitute royalty under the Indian law, as well as under the India-Ireland Double Tax Avoidance Treaty (DTAT), and therefore are subject to withholding tax. The court said both the parties should appear before the tribunal on May 3. The ITAT had rejected made contentions by holding that the advertising module works only with the help of various patented tools and software. It said all of this involves a huge amount of intellectual property (IP) and so Google India could not be described as just a reseller of ad space.
Source: Economic Times