Ita/1058/2006 Of The Commissioner Of Income Tax v. M/S Sonata Information Technology Limited

IN THE HIGH COURT OF KARNATAKA AT BENGALURUDATED THIS THE 29 DAY OF JANUARY 2020 PRESENT THE HON’BLE MR. JUSTICE ALOK ARADHE AND| THE HON’BLE MR. JUSTICE RAVI V.HOSMANLLT.A. NO.1058 OF 2006 BEI|WEEN 1.THE COMMISSIONER OF INCOME-TAX INTERNATIONAL TAXATION RAS TROTHANA BUILDING NRUPATHUNGA ROAD, BANGALORE.| 2).THE INCOME-TAX OFFICER| INTERNATIONAL TAXATION WARD-19(2), RASTROTHANA BUILDING. NRUPATHUNGA ROAD, BANGALORE. _.. APPELLANTS (By Sri. K.V. ARAVIND, ADV.) AND" M/S. SONATA INFORMATION TECHNOLOGY LIMITEDNO.193, 1 FLOOR, R.V. ROAD|BASAVANGUDI, BANGALORE-560004. ... RESPONDENT (By Smt. VANI H, ADV.) THIS IJ§.T.A. IS FILED UNDER SECTION 260-A OINCOME TAX ACT 1961, PRAYING TO FORMULATE THE) SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE. ALLOW|THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE!INCOME TAX APPELLATE TRIBUNAL, BANGALORE IN ITA)NO.1604-1644/BANG/2004 DATED 31.1.2006 AND CONFIRMTHE ORDER OF THE COMMISSIONER OF INCOME TAX!(APPEALS )-VI, BANGALORE & ETC. THIS I.T.A. COMING ON FOR ADMISSION, THIS DAY,ALOK ARADHE J.,DELIVERED THE FOLLOWING: JUDGMENT Mr.K.V.Aravind, learned counsel for the appellant. Smt.Vani H., learned counsel for the respondent. 2. This appeal under Section 260-A of the Income|Tax Act, 1961 (hereinafter referred to as ‘the Act’, forshort) has been filed by the revenue which is admittedon the following substantial questions of law: 1.|Whether the Tribunal was correct|in holding that the assessee is not liable todeduct TDS in respect of payments made forpurchase of software as the same cannot betreated as Income liable to tax In India asRoyalty or Scientific Work under section 9 ofthe Act read with Double Taxation AvoidanceAgreements and treaties. ?_|Whether the Tribunal was correct|in holding that since the assessee hadpurchased only a right to use the copyrighti.e., the software and not the entire copyrightitself, the payment cannot be treated asRoyalty as per the Double Taxation AvoidanceAgreement and Treaties which ts beneficial to-the assessee and consequently section 9 ofthe Act should not take into consideration. 3.Whether the Tribunal should have|recorded a finding that it is under section195(2) and (3) and (4) of the Act, theChargeability to tax or not of the recipient is—decided and having failed to obtain such adecision the assessee was pound to deducttax at source as held by the Apex Court inP39 TTR 587. q |Whether the Tribunal was correct|in holding that the payment partakes theCharacter of purchase and sale of goods andthereforecannotbe|treatedaS|royaltypayment liable to Income Tax. 3. Learned counsel for the parties jointly submit|that the controversy involved in this appeal is squarely covered by the judgment of this Court in ITANo.2987/2005 in favour of the revenue. It ts furthersubmitted that the aforesaid order is subject matter ofchallenge in Civil Appeal Nos.8942-47/2018. 4. In view of the aforesaid submission, this appeal is disposed of with a direction that the Assessing OfficerShall pass consequential order under Section 260(1A) ofthe Act in terms of the judgment which may bedelivered in the aforesaid civil appeals. With the aforesaid liberty, the appeal is disposed| of. RV| Sd/-JUDGE Sd/-|JUDGE