Case Law Details
Google India Private Ltd Vs CIT (Karnataka High Court)
Conclusion: High Court quashed the order passed by Income Tax Appellate Tribunal (ITAT) imposing royalty taxation for ‘Adwords program’ as the material on the basis of which the order had been passed by Tribunal was not furnished to the appellant at any point time, the order passed by the Tribunal was certainly violative of principles of natural justice and fair play as the appellant was not afforded an opportunity to rebut fresh evidence especially when such evidence was based on Google study.
Held: Appellant – company, Google India Private Ltd., had been incorporated for providing back end support services for the foreign Associated Enterprises and as such, was engaged in the business of global outsourced Information Technology and IT Enabled Services. It was also a non-exclusive distributor of the online advertising space under the ‘Ad Words programme’ to advertisers in India. AO for the assessment years 2007-08 to 2012-13 passed an order thereby determining the appellant as ‘assessee in default’ in respect of non-deduction of tax at source for the sums payable to Google Ireland as ‘fee for distribution rights’ and consequently, attaching a tax liability of INR 7,40,47,853/- for the assessment year 2007-08. It was held that keeping in view Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963 and also keeping in view the fact that the material on the basis of which the order had been passed by Tribunal was not furnished to the appellant at any point time, the order passed by the Tribunal was certainly violative of principles of natural justice and fair play as the appellant was not afforded an opportunity to rebut fresh evidence especially when such evidence was based on Google study. Therefore, the matter was remanded back to Tribunal.
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
Regard being had to the similitude in the controversy involved in all these cases, they were heard analogously together and a common judgment is being passed.
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