THE COMMISSIONER OF INCOME TAX vs. M/S SONATA INFORMATION TECHNOLOGY LIMITED

THE COMMISSIONER OF INCOME-TAX

THE INCOME-TAX OFFICER

This appeal under Section 260-A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’, for short) has been filed by the revenue which is admitted on the following substantial questions of law: 1. 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 India as Royalty or Scientific Work under section 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. 3. Whether the Tribunal should have recorded a finding that it is under section 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 239 ITR 587. 4. 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.

Learned counsel for the parties jointly submit that the controversy involved in this appeal is squarely

In view of the aforesaid submission, this appeal is disposed of with a direction that the Assessing Officer shall pass consequential order under Section 260(1A) of the Act in terms of the judgment which may be delivered in the aforesaid civil appeals. With the aforesaid liberty, the appeal is disposed of.