Khushi Bajpai
Published on: September 4, 2022 at 18:09 IST
The TDS default decision issued against Google India has been overturned by the Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) on the grounds that it was time-barred.
The four years from the end of the financial year in which payment was made or credit was given expired for the years under consideration on 31.03.2012, according to the two-member bench of George K. (Judicial Member) and Padmavathy S. (Accountant Member), where the notice was issued by the AO on 20.11.2012.
A fully owned US subsidiary of Google International LLC is the appellant/assesses. It was in the business of giving its group companies access to information technology (IT) and IT-enabled services (ITeS).
The assessee has entered into the Google AdWords program distribution agreement dated December 12, 2005, with Google Ireland Ltd. (GIL). The assessee was designated as a non-exclusive authorized distributor of AdWords programming to the advertisers in India, in accordance with the agreement. The assessee was required by the agreement to pay GIL distribution fees.
Distribution fees were paid without deducting the tax source. The assessee claimed that it was only a reseller of the advertising space made accessible by the distribution agreement for the ad word program. The assessee distributes advertising space but has no access to or control over the facilities or procedures used to produce Double Taxation Avoidance Agreements (DTAA).
The department argued that the assessment order where it is stated that the proceedings under Section 201(1) were begun by issuing a notice on November 20, 2012, asking the assessee to demonstrate why it should not be treated as an assessee in default in regards to tax that was not deducted at source on the amounts owed to GIL.
The notification was sent for AYs 2007-08 and 2008-09 after the period of time allowed by Section 201(3), or after 4 years had passed after the end of the financial years in which the payment or credit was made. The assessments are therefore time-barred and subject to being thrown out.
The ITAT noted that a show cause notice to initiate proceedings under Section 201(1) was issued on 20.11.2012, which was beyond four years with respect to assessment years 2007-08 and 2008-09.
