TaxTMI 
TaxTMI 
2019 (9) TMI 348
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....nd circumstances of the case, Google India Pvt.Ltd., respectfully submits that the order of the Ld.CIT(A)-I, Bangalore is not correct as it is based on incorrect interpretation of fact and law and therefore, is bad in law and hence, needs to be cancelled. The appellant also submits that each of the grounds hereinafter are independent and without prejudice to one another. 1.The Ld.CIT(A( erred in upholding the levy of penalty u/s 271(1) (c) of the Act on the disallowances and additions made by the Ld.Addl.CIT, Range-11, Bangalore in the assessment order without awaiting the outcome of the quantum appeal proposed to be filed by the appellant before the ITAT. 2. The Ld.CIT(A) erred in upholding the levy of penalty u/s 271(1)(....
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.... section 274 to the appellant as to whether there was concealment of income or whether the appellant has furnished inaccurate particulars of income for initiating the penalty proceedings under section 271(1)(c) of the Act, and therefore, the notice u/s 274 dated 30 November 2011 is invalid. 2. Brief facts of the case are as under: Assessee is a wholly owned subsidiary of Google international LLC, USA and is engaged in business of providing information technology and information technology enabled services to its group companies. It also acted as distributor for AdWord programmes in India. Assessee thus entered into distribution agreement with Ireland PE, whereby assessee was granted marketing and distribution rights of AdWord Program ....
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.... hands of U.S. AE. It was also argued that there was no transfer of technical knowhow or trademark, intellectual property rights or any process in favour of assessee under the ad word distribution agreement as held by Ld.AO and therefore payment made under this agreement would not be termed to be payment of royalty and was chargeable to tax under section 9 (1) (vi) as deemed income accrued in India. Per contra revenue argued that payment was towards purchase of AdWord space for its resale to advertisers and payment was made after deducting particular percentage from the advertisement receipts received from the advertisers, though as per service agreement assessee rendered certain technical services, that too for AdWord Programs only, for....
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....her the Tribunal's conclusion that the ITES and Distribution agreements are to be read together and that the functions under the Distribution agreement could only be discharged under the ITES agreement is perverse given that the same is contrary to facts and mat3erial on record which would demonstrate that the two Agreements are for separate and distinct purposes?. 3. Whether the Tribunal erred in law in not appreciating that the revenues from the Distribution Agreement (superseded by Reseller agreement) constituted 'business income' in the hands of GIL and in the absence of any Permanent Establishment of GIL in India, such receipts could not be brought to tax in India and consequently the provisions of Section 195 and 201 of the A....
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....r consideration. He also placed reliance upon decision of Hon'ble Karnataka High Court in case of CIT vs Ankita Electronics Pvt Ltd., reported in (2015) 379 ITR 50 wherein it has been laid down that; "........... The mere admission of the appeal by High Court on the substantial questions of law would make it up apparent that the additions made were debatable. There was no concealment of income or furnishing of inaccurate particulars of such income. The penalty could not be imposed under section 271 (1) (c )." Similar is the view taken by Hon'ble Karnataka High Court in a subsequent decision in case of CIT vs Dr Hirsha N. Biliangady reported in (2017) 79 Taxmann.com 376. Ld.CIT.DR on contrary placed reliance on orders....