Dismissing the appeals the Court held that the Tribunal was right in holding that the assessee ought to have deducted tax at source on the licence fee under S. 195 and deposited to the Treasury, because it constituted royalty under article 12(3) of the Double Taxation Avoidance Agreement between India and the U.S.A., to the company in the U.S.A. and on account of its failure to do so, it was also liable to pay interest thereon under S. 201(1A) of the Act. (AY. 2001-02, 2002-03)
Zylog Systems Ltd. v. ITO (2019) 415 ITR 311/(2020) 185 DTR 319 / 116 taxmann.com 927 / 314 CTR 671(Mad.)(HC)
S. 195 : Deduction at source-Non-resident-Royalty-Licence fee for use of software-Liable to deduct tax at source–Levy of interest is valid – DTAA-India–USA. [S. 90, 201(1), 201(IA), Art. 12(3)]