ZYLOG SYSTEMS LIMITED, Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) The Assessee M/s.Zylog Systems Limited, Chennai now said to be in Liquidation, had filed these Tax Cases under Section 260-A of the Income Tax Act, by raising the following purported substantial questions of law arising from the order passed by the Income Tax Appellate Tribunal dated 27.1.2006, by which the learned Tribunal dismissed the Appeal filed by the Assessee for the Assessment Years 2001-02 and 2002-03 and upheld the orders passed by the Appellate Authority.

(2.) The questions on which the present Tax Cases had been admitted by a coordinate Bench of this Court are quoted below for ready reference:-

(3.) The facts in brief are as under:- The Assessee-Company is engaged in the business of development of Software. The Assessee entered into a Licence Agreement with M/s.Bluestone Software Inc. for getting a licence to use Bluestone's Total e-Business and Universal Business Server, Universal Listener Framework, Scheduler, XMLServer and Visual XML development. The assessee has paid a sum of US $3,00,000 which is equivalent to Indian Rs.1,38,57,2501- towards licence fee. The Assessing Officer treated this payment of US $3,00,000 as Royalty and also treated the Assessee a Assessee-in-default under Section 201( 1) of the Income Tax Act. The Assessing Officer has also levied interest under Section 201(IA) of the Income Tax Act. The Assessee, being aggrieved by the order of the Assessing Officer, filed an appeal before the CIT(A). The CIT(A), after elaborately discussing the issue, confirmed the order of the Assessing Officer. Therefore, the Assessee filed Appeals before the Tribunal.