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To answer your questions -
1] Can we use - Database Gateway for SQL Server for the above set up ? If so , does this require a separate license ?
Yes, you can use DG4MSQL and it does require a separate license.
Your best option would be to use the latest version which is 184.108.40.206 but this requires you to apply patch 5965763 to your 220.127.116.11 RDBMS. See this note in My Oracle Support -
Note.549796.1 Desupport of Oracle Transparent Gateways (Doc ID 549796.1)
You also need to be on a particularAIX version as shown in the certification matrix -
if you install the gateway on AIX.
2] Where Do we need to install the "Database Gateway for SQL Server " -- soruce or target server ?
You can install DG4MSQL on any machine and connect to it from the RDBMS on AIX using database links. So, you can install on either AIX or Windows where SQL*Server is running. There is no difference in the performance.
3] Is there any other solution apart from using "Database Gateway for SQL Server " ?
You could also use the Database Gateway for ODBC (DG4ODBC) which uses a third party ODBC driver to make the connection between the gateway and the non-Oracle database. This is included with your RDBMS license but you need to supply the ODBC driver
The following notes on My Orcle Support have further details and information -
Master Note for Oracle Gateway Products (Doc ID 1083703.1)
Options for Connecting to Foreign Data Stores and Non-Oracle Databases (Doc ID 233876.1)
Functional Differences Between DG4ODBC and Specific Database Gateways (Doc ID 252364.1)
Gateway and Generic Connectivity Licensing Considerations (Doc ID 232482.1)
Depending what you want to do you could also use the GoldenGate product to replicate between Oracle and SQL*Server -
This also requires aa separate license.