Bangalore: Google India, the Search giant’s Indian arm, has been axed by the income tax department for Rs 76 crore for flaunting tax rules, reports ET.

The tax office said that the company has misled the department, deflated income, violated accounting norms set by the chartered accountants’ institute and also attempted to show wrong revenues to avoid being subjected to transfer pricing adjustments with respect to its international transactions.

IT department of India has refused to keep the penalty in abeyance after their investigations with the company’s auditor, SR Batliboi and Associates, who have offered the full so-operation in the proceedings.

Google has appealed against the penalty order that is related to assessment year 2008-2009. "If the order is upheld, the total advertisement revenue of Google India will be taxed in India," said a person familiar with the case.

According to the tax officers, Google India had transferred Rs 119.83 crore to Google Ireland Limited, the Google’s subsidiary in Irland, without paying tax at the source in line with the treaty between India and Ireland. "The entire activity of (Google's) AdWords Programme and the revenue earned until now has happened in India with both the advertisers as well as people making use of the advertisements situated in India. To this extent, the income of Google Ireland Limited was held to be accrued as well as arisen in India itself," said the order.

The tax officers tracked the other markets of Google through various sources and media reports, and they were abreast with the nature of the Google Ireland transactions which were aimed at tax evasion. According to the report, Google’s arms in Asia, Middle-East and other reasons routed their money through Netherland office to an entity in Bermuda, a tax heaven.