ITAT: Pay reimbursement not income for Google US

Mumbai: Google US has won a favourable order from the Bengaluru bench of the Income Tax Appellate Tribunal (ITAT) in a recent case where it had been reimbursed by Google India for salary costs. The salaries were for employees deputed here under a secondment arrangement.

Tax authorities had sought to treat such salary reimbursement of Rs 20.6 crore and Rs 39.5 crore, respectively, for two financial years (which were covered by the tax dispute) as ‘Income from included services’ in the hands of Google US under the India-US tax treaty. This would, in turn, result in withholding obligations for Google India. However, owing to clear-cut details in the secondment agreement, the ITAT bench held that such reimbursement cannot be treated as income of the US company.