Commissioner of Income Tax, International Taxation vs ING Vysya Life Insurance Co. (P.) Ltd.

D.V. Shylendra Kumar, J.—Appeal by the revenue raising the following substantial questions of law:

Whether the Tribunal was correct in holding that the assessee is not liable to deduct TDS in respect of payments made for purchase of software as the same cannot be treated as income liable to tax in the India as Royalty or Scientific Work u/s 9 of the Act read with Double Taxation Avoidance Agreements and treaties.

Whether the Tribunal was correct in holding that since the assessee had purchased only a right to use the copyright i.e., the software and not the entire copyright itself, the payment cannot be treated as Royalty as per the Double Taxation Avoidance Agreement and Treaties which is beneficial to the assessee and consequently section 9 of the Act should not take into consideration.

Whether the Tribunal should have recorded a finding that it is u/s 195(2) and (3) and (4) of the Act, the chargeability to tax or not of the recipient is decided and having failed to obtain such a decision the assessee was bound to deduct tax at source as held by the Apex Court in The Transmission Corporation of A.P. Ltd. and Anr Vs. The Commissioner of Income Tax, A.P.,

Whether the assessee can question the taxability of the recipient in section 201(1) of the Act proceeding when the assessee has to show only "without good and sufficient reasons failed to deduct and pay tax", which has not been shown in the facts of the present case and non-taxability cannot be taken as a sufficient reason, when section 195(2)(3)(4) of the Act certificate is not obtained.

Whether the Tribunal was correct in holding that the payment partakes the character of purchase and sale of goods and therefore cannot be treated as royalty payment liable to Income Tax.

Sri M V Seshachala, learned senior standing counsel appearing for the appellant-revenue submits that the questions have to be answered in the negative and in favour of the revenue, as such questions have already been answered by a division bench of this court in the case of Commissioner of Income Tax, International Taxation Vs. Samsung Electronics Co. Ltd., He also submits that this legal position is so indicated in terms of an earlier judgment of a division bench of this court in the case of CIT v. Synopsis International Old Ltd (ITA Nos. 11-15 of 2008 and 17 of 2008 dated 3-8-2010).

Accordingly, this appeal is allowed, the questions are answered in the negative and in favour of the revenue, order of the tribunal is set aside and the assessment order is restored.

In favour of revenue.