Google India, the Indian arm of the global search giant has been hit with a Rs 76 crore (1 USD = Approx INR 54) penalty. This penalty has been slapped by the Income Tax Authority of India for incorrect accounting.
The Income Tax department has said that Google India deflated its income and violated accounting rules laid down by the Institute of Chartered Accountants of India. Specifically it attempted to show wrong revenues to avoid being subjected to transfer pricing adjustments with respect to its international transactions.
The authorities further say that Google India credited an amount of Rs 119.83 crore to Google Ireland Ltd towards distribution fees without deducting tax at source in line with the tax treaty between India and Ireland.
The entire activity of (Google’s) AdWords Programme and the revenue earned thereon has happened in India with both the advertisers as well people making use of the advertisements situated in India. To this extent, the income of M/s Google Ireland Ltd was held to be accrued as well as arisen in India itself, said the order.
According to a report, Google’s arms in Asia, Middle-East and other regions routed earnings through the Netherlands office before the money found its way to an entity in Bermuda, a tax haven.
Google has denied flouting norms and has decided to go on appeal against the IT order.