ITAT asks Google India to pay Rs. 500 Crores in Three Installments [Read Order]

The Bangalore bench of the Income Tax Appellate Tribunal (ITAT), while disposing a stay petition, asked Google India to pay Rs. 500 Crores in Three Installments.

The income tax department had made additions against the Company under three heads, i.e, the amount paid to the parent Company for distribution services under Adword Programmes was subject to TDS under Section 195 of the Income Tax Act. Further, an addition was made after determination of Arm’s Length Price (ALP) u/s.92 of the Act, in respect of international Transactions of rendering IT services and IT enabled Services and Marketing and Distribution services rendered by GIPL to its Associated Enterprises (AE). Third addition was made since the profits arising out of AdWords programme attributable to Google Ireland are not offered to tax.

The assessee contended that the issue regarding TDS is pending before the Karnataka High Court. With reference to the other two additions which has given rise to the outstanding demand, the learned counsel pointed out that in the earlier orders of the Tribunal the issue has been set aside to the AO for fresh adjudication and therefore the demand arising out of those additions should not be permitted to be recovered. He submitted that if on the issue of addition on account of Royalty alone is considered for calculating outstanding demand, then 50% of the outstanding demand for all the three years would be about Rs.347 Crores, after giving credit to Rs.375 Crores already paid by the Assessee.

While disposing the stay petition, the Tribunal held that “after considering the existence of prima facie case, balance of convenience, relative hardship, the earlier orders of the Tribunal and the orders of the Hon’ble High Court of Karnataka in the case of the Assessee on identical issue of grant of stay, the offer to pay by the Assessee and the demand of the department, we are of the view that it would be just and appropriate to grant an order of stay of recovery of outstanding demand for a period of 6 months from the date of this order, or till disposal of the appeals of the Assessee, whichever is earlier. The Assessee shall pay the following sums towards outstanding demand viz., a sum of Rs.350 Crores on or before 31.3.2019 and another sum of Rs.125 Crores in three instalments a as follows:- Rs.25 Crores on or before 30.4.2019 Rs.50 Crores on or before 31.5.2019 Rs.50 Crores on or before 30.6.2019.”