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TMI Blog2009 (9) TMI 961X X X X Extracts X X X X X X X X Extracts X X X X ..... 951 of 2008, 952 of 2008, 953 of 2008, 955 of 2008, 959 of 2008, 960 of 2008, 966 of 2008, 967 of 2008, 969 of 2008, 970 of 2008, 973 of 2008, 977 of 2008, 980 of 2008, 981 of 2008, 983 of 2008, 984 of 2008, 986 of 2008, 988 of 2008, 997 of 2008, 999 of 2008, 1000 of 2008, 1001 of 2008, 1002 of 2008 have also come up for hearing which are heard along with the above-mentioned appeals. 3. While the main batch of cases involving the question of the nature of obligation on the part of a resident payer who is making payment to a non-resident recipient, as envisaged in terms of section 195 of the Income-tax Act, 1961 [for short the Act ] which is a provision for deduction of an amount in advance at a percentage of the remittance, extent of percentage, having been provided by the Finance Act, the deduction is towards the possible future tax liability of the non-resident recipient under the provisions of the Act on the premise that the non-resident recipient will be liable to pay tax in India, as the receipt in the hands of the non-resident recipient comprises of an element of taxable income and on the scope and the nature of the obligation in terms of sub-section (1) of section 195 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n after deducting not remitting the amount etc., and therefore, the consequential action under section 201 of the Act comes into play and that again having been questioned, the further appeals were examined by us. 6. Insofar as the present appeals are concerned, Sri G. Sarangan, learned senior counsel appearing on behalf of the respondents has tried to draw a distinction of the present situation by submitting that the situation that prevailed in the case of the present respondents is slightly different, in the sense, that the resident payer having deducted the amount and having remitted, was unable to prefer appeal under section 248 of the Act and in fact, if had preferred such appeals by not deducting any amount by disputing the liability to deduct, could have succeeded in the appeal and in such circumstances, there is no need for this court to upset the orders passed by the Tribunal which has very correctly held that the amount i.e., the remittance made by the resident payers is not having any character of income in the hands of the non-resident recipient and therefore, there is no obligation. 7. With the revenue having preferred appeals even in such situations, we are re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force : Provided that in the case of interest payable by the Government or a public sector bank within the meaning of clause (23D) of section 10 or a public financial institution within the meaning of that clause, deduction of tax shall be made only at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode : Provided further that no such deduction shall be made in respect of any dividends referred to in section 115-O. Explanation.-For the purposes of this section, where any interest or other sum as aforesaid is credited to any account, whether called interest payable account or Suspense account or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly. (2) Where the person responsible for paying any such sum chargeable under this Act, (other than salary) to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely an authority to hold that a resident payer under section 195(2) of the Act can also maintain an appeal under section 248 of the Act and pursue the matter, but the further proposition that therefore, the argument on behalf of the resident payer that it envisages within its scope a situation contemplated under section 195(1) of the Act and it is a very correct and proper argument available on the authority of the Supreme Court in Wesman Engg. Co. (P.) Ltd. s case (supra), does not necessarily flow from the Judgment of the Supreme Court insofar as this aspect of the matter is concerned. One should bear in mind that a judgment is an authority only for what it decides and definitely not an authority for what it actually does not decide. 14. We have already indicated in the earlier batch of appeals in terms of the Judgment, pronounced on 24-9-2009 in ITA No. 2808 of 2005 and connected matters, the scope of the provisions of sections 195(1) and 195(2) of the Act or even in a situation of procedure contemplated under section 195(3) of the Act etc., is not a procedure for assessment of the tax liability of a non-resident recipient. It is a provision contemplated for ensuring a resid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he course of examination of an application under sub-section (2) of section 195, for the purpose of determining, the extent up to which, the amount required to be deducted under sub-section (1) of section 195, can be reduced, as a procedure of assessment of the income of the non-resident in the hands of the resident is not even contemplated in sub-section (1) of section 195 of the Act itself and therefore, if the original authority itself is not having the power or jurisdiction to assess the income of the non-resident under section 195 of the Act, the question of reading in such a power under sub-section (2) of section 195(1), is not possible in law, nor such a jurisdiction can be independently found with the appellate authority, as the appellate authority exercising appellate power and jurisdiction can at the best have such power and jurisdiction, co-extensive with the power and jurisdiction of the original authority and cannot be over and above it. The appellate authority exercises power only for the purpose of correcting any mistake or errors, illegality committed by the original authority and nothing beyond. The extent of the power, authority and jurisdiction of an appellate au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and on the authority of the Supreme Court in the case of Transmission Corpn. of A.P. Ltd. v. CIT [1999] 239 ITR 5871 and as already indicated in the Judgment of this Court rendered on 24-9-2009 in ITA No. 2808 of 2005 and connected matters. 22. On applying such tests, we find that the questions posed in ITA No. 351 of 2007, have to be answered as under :- Sl. No. Substantial questions raised Answer 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. Not correct, in the negative, against the assessee and in favour of the revenue 2. 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 Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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