Google India payments to Ireland outfit are not royalty and are not subject to withholding tax: ITAT

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October 22, 2022

Google India was relieved when the Income Tax Appellate Authority (ITAT) ruled that its 2007-08–2012-13 payments to Google Ireland were not royalties and therefore not subject to withholding tax.
Google India’s Rs 1,457 crore payments to Google Ireland are being disputed as royalties and taxed in India. The ITAT ruled in 2018 that Google India’s royalty payment to Google Ireland should be taxed in India. Karnataka High Court ordered ITAT to reconsider.
On October 19, 2022, the ITAT overturned its 2018 ruling and declared that such money transfer was not a royalty. In a 72-page order dated October 19, the ITAT upheld Google India’s appeal, ruling that “the impugned payment cannot be characterised as royalty under the India-Ireland DTAA.”