Finally, the Income Tax Appellate Tribunal, Bangalore granted a conditional stay to the network giants, Google, asking them to deposit Rs. 179 crores.
Last month, the Karnataka High Court, while refusing to grant complete stay of demand, had asked the network giants to deposit 26 crores during the pendency of the appeal before the Appellate Tribunal. The Court, in that order, had directed the assessee to retain a balance of another 20% in the account No.0037238007, in addition to already paid amount of 55% of the outstanding demand.
In October, the ITAT has refused grant stay to the Company after losing a six year old tax avoidance case following the ITAT order refusing the order of the department treating the assessee as “the assessee in default” for non-deduction of tax in respect of payment made by the assessee to Google Ireland Ltd., as the same was in the nature of royalty both under the provisions of domestic law as well as under DTAA between India and Ireland in the order passed by the TDS officer u/s 201(1) & 201(1A) of the Income Tax Act, 1961.
Now, the petitioners sought for stay of demand made by the department for the assessment years 2009-10 to 2012-13.
Before the Tribunal, the petitioner relied on the Delhi High Court decision in Nokia Corporation v. Director of Income tax (International Taxation) wherein the Court held that it would be incumbent upon the Revenue to take into account the tax liability of the assessee for the entire period in respect of which the dispute was still alive.
On behalf of the department, it was contended that the assessee be burdened with same conditions laid down by the Karnataka High Court in the above order. It was further contended that the issue of the payment made by the assessee to Google Ireland is covered against the assessee in ITA No.1151/Bang/2013, vide order dt.23.10.2017, whereby the Tribunal held that the payment made by the assessee to Google Ireland was in the nature of royalty.
The bench found that there are no distinguishing facts in the present stay petitions and relevant appeals pending adjudication before the Tribunal. Tt was observed that the condition laid down by the High Court to the assessee was just and proper.
“Hence, respectfully following this judgment of Hon’ble Jurisdictional High Court, we deem it appropriate to direct the assessee to deposit a further amount of Rs 175 crores so as to make it 55% ( 500 crores approx) of the impugned total demand of Rs. 910.61 Crores in respect to all these four assessment years i.e. 2009-10 to 2012-13, on or before 15.12.2017. We also direct the assessee to retain balance of another 20% in account No. 0037238007, maintained with CITI Bank, M.G.Road Branch, Bengaluru-560 001 which comes to Rs.182 crores, during the pendency of these appeals before the Tribunal in addition to depositing further amount of Rs 175 crores . In terms of conditions mentioned herein above, stay orders earlier granted are extended for a period of three months from the date of this order or till the date of disposal of the appeals, whichever is earlier subject to compliance of the above directions. The other conditions mentioned in the earlier orders for grant of stay shall continue to apply against the parties.”
