Payments for marketing and distribution rights held taxable royalty
The Bangalore Bench of the Income-tax Appellate Tribunal held that payments for marketing and distribution rights of an “adwords” program were taxable as income. Under the adwords program’s distribution and service agreements, the taxpayer was licensed to use certain confidential information, technical know-how, trade mark, brand features, derivative works, etc., but ownership of these intangibles remained with the foreign company. The tribunal found this license was not merely an agreement to provide advertisement space but was a license to be used in facilitating the display and publishing of an advertisement to targeted customers. The case is: Google India Private Ltd. Read a May 2018 report [PDF 610 KB] of KPMG
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