1 IN HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS 29 TH DAY OF JANUARY 2020 PRESENT HONBLE MR. JUSTICE ALOK ARADHE AND HONBLE MR. JUSTICE RAVI V. HOSMANI I.T.A. NO.1058 OF 2006 BETWEEN: 1. COMMISSIONER OF INCOME-TAX INTERNATIONAL TAXATION RASTROTHANA BUILDING NRUPATHUNGA ROAD, BANGALORE. 2. 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 LIMITED NO.193, 1ST FLOOR, R. V. ROAD BASAVANGUDI, BANGALORE-560004. RESPONDENT (By Smt. VANI H, ADV.) THIS I.T.A. IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, PRAYING TO FORMULATE 2 SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE. ALLOW APPEAL AND SET ASIDE ORDERS PASSED BY INCOME TAX APPELLATE TRIBUNAL, BANGALORE IN ITA NO.1604-1644/BANG/2004 DATED 31.1.2006 AND CONFIRM ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-VI, BANGALORE & ETC. THIS I.T.A. COMING ON FOR ADMISSION, THIS DAY, ALOK ARADHE J., DELIVERED FOLLOWING: JUDGMENT Mr. K. V. Aravind, learned counsel for appellant. Smt. Vani H., learned counsel for respondent. 2. This appeal under Section 260-A of Income Tax Act, 1961 (hereinafter referred to as Act , for short) has been filed by revenue which is admitted on following substantial questions of law: 1. Whether Tribunal was correct in holding that assessee is not liable to deduct TDS in respect of payments made for purchase of software as same cannot be treated as income liable to tax in India as Royalty or Scientific Work under section 9 of Act read with Double Taxation Avoidance Agreements and treaties. 3 2. Whether Tribunal was correct in holding that since assessee had purchased only right to use copyright i.e., software and not entire copyright itself, payment cannot be treated as Royalty as per Double Taxation Avoidance Agreement and Treaties which is beneficial to assessee and consequently section 9 of Act should not take into consideration. 3. Whether Tribunal should have recorded finding that it is under section 195(2) and (3) and (4) of Act, chargeability to tax or not of recipient is decided and having failed to obtain such decision assessee was bound to deduct tax at source as held by Apex Court in 239 ITR 587. 4. Whether Tribunal was correct in holding that payment partakes character of purchase and sale of goods and therefore cannot be treated as royalty payment liable to Income Tax. 3. Learned counsel for parties jointly submit that controversy involved in this appeal is squarely 4 covered by judgment of this Court in ITA No.2987/2005 in favour of revenue. It is further submitted that aforesaid order is subject matter of challenge in Civil Appeal Nos.8942-47/2018. 4. In view of aforesaid submission, this appeal is disposed of with direction that Assessing Officer shall pass consequential order under Section 260(1A) of Act in terms of judgment which may be delivered in aforesaid civil appeals. With aforesaid liberty, appeal is disposed of. Sd/- JUDGE Sd/- JUDGE RV CIT, International Taxation, Bangalore / ITO, International Taxation, Ward-19(2), Bangalore v. Sonata Information Technology Limited