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Judgment
Aravind Kumar, J.—The revenue is in appeal questioning the legality and correctness of the order passed by the Income Tax Appellate Tribunal in ITA No.61/Bang/2002 dated 16.5.2005. Brief facts leading to present this appeal are that; during the assessment year 1999-2000, the Assessing officer noticed that certain payments had been made to non-residents and in respect of those payments, the tax had not been deducted at source before making the payments, which triggered the cause of auction for Assessing officer to seek explanation from the respondent and on consideration of the report by the assessment orders passed u/s 291(1), 201(1A) of the Income Tax Act came to be passed holding that respondent was in default u/s 201(1) of I.T. Act and also liable to pay interest u/s 201(1A) of the I.T. Act. This order came to be challenged by the assessee before the Appellate Commissioner, which was confirmed and persuaded by the respondent before the Tribunal with success.
The revenue is in appeal questioning the said order of the Tribunal raising the following substantial questions of law:
1) Whether the Tribunal was correct its holding that the assessee is not liable to deduct TDS in respect of payments made for purchase of software as the came cannot be treated as income liable to tax in India as Royalty or scientific work u/s 9 of the Act read with Double Taxation Avoidance Agreements and treaties?
2) Whether the Tribunal was correct in holding that since the assesses 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?
3) 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 assesses was bound to deduct tax at source as held by the Apex Court in 239 ITR 567?
4) Whether the assessee can question the taxability of the recipient in section 201(1) and 201(1A) 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?
5) Whether the Tribunal was correct in holding that the payment partakes the character of purchase and sale of goods and therefore cannot foe treated as royalty payment liable to income Tax?
Similar substantial questions of law were raised in ITA 2808/2005 and other connected matters before this Court, wherein this Court has answered the questions or law in favour of the Revenue and against the assesses by order dated 24.9.2009. Following the said judgment dated 24.9.2009, we allow this appeal filed by Revenue and set aside the order of Tribunal by answering substantial questions of law in favour of the revenue and against the assessee. Parties to bear their costs.