2012 (12) TMI 601

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....he present case is a company which is engaged in the business digital advertising and internet marketing. It utilises the internet search engine such as Google, Yahoo etc. to buy space in advertising on the internet on behalf of its clients. The search engine carries out its own programme whereby the assessee books certain words called "key words". Whenever any person searches through the net for a specific "key word", the advertisement of the assessee or its client is displayed. For example, if the "key word" "Hotels in Mumbai" is searched for, the advertisement of 'Taj Hotel' may be displayed among sponsor links on the search engine page. The price charged for such booking depends on type of phrase, its popularity, usage etc. The search e....

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....hallenged by the assessee in an appeal filed before the Ld. CIT (A) who confirmed the said disallowance made by the A.O. for the following reasons given in paragraph No.9 "....I am unable to accede to the argument of the appellant. It is not in dispute that the payment has been made for the comprehensive services rendered for digital data display in their server and that the same will fall within the meaning of royalty as has been envisaged u/s. (1)(vi) of the Act. From the facts it is clear that the said Google or for that matter yahoo etc. allot the space to the appellant company and its clients in their server and that whenever any internet user search for certain webs the appellant's or its client's name would appear and its contents b....

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....8. As already noted by us, the payment made by assessee in the present case to Yahoo Holdings (Hong Kong) Ltd. was for services rendered for uploading and display of the banner advertisement of the Department of Tourism of India on its portal. The banner advertisement hosting services did not involve use or right to use by the assessee any industrial, commercial or scientific equipment and no such use was actually granted by Yahoo Holdings (Hong Kong) Ltd. to assessee company. Uploading and display of banner advertisement on its portal was entirely the responsibility of Yahoo Holdings (Hong Kong) Ltd. and assessee company was only required to provide the banner Ad to Yahoo Holdings (Hong Kong) Ltd. for uploading the same on its portal. Asse....