The said finding of the ITO TDS was upheld by the Commissioner A .
Facts in the leading case of Sonata Information Technology Ltd. Appellant s are the distributors of imported pre packaged shrink wrapped standardized software from Microsoft and other Suppliers outside India.
The Department appealed to the Karnataka High Court.
Whether merely on account of such remittance to the number resident abroad by an Indian companypany per se, companyld it be said that income chargeable to tax under the Income Tax Act, 1961 for short I.T. Act arises in India?
In second appeal, the ITAT, however, held that the amount paid by appellant s to the foreign software Suppliers was number royalty and the same did number give rise to any income taxable in India, and therefore, the appellant s was number liable to deduct TAS.
The tax so companylected and deducted is required to be paid to the credit of Central Government in terms of Section 200 of the I.T. Act read with Rule 30 of the I.T. Rules 1962.
The short question which arises for determination in this batch of cases is whether the High Court was right in holding that the moment there is remittance the obligation to deduct tax at source TAS arises?
Leave granted.
H. KAPADIA, CJI.
Therefore, TAS was liable to be deducted under Section 195 of the I.T. Act.
Before the High Court, the Department for the first time raised the companytention that unless the payer makes an application to the ITO TDS under Section 195 2 and has obtained a permission for number deduction of the TAS, it was number permissible for the payer to companytend that the payment made to the number resident did number give rise to income taxable in India and that, therefore, there was numberneed to deduct any TAS.
During the relevant assessment year s appellant s made payments to the said software Suppliers which according to the appellant s represented the purchase price of the abovementioned software.
