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2019 (5) TMI 277 - AT - Income TaxRate of TDS - payments made to non-resident entities not having PAN - TDS liability @10% OR 20% - tax prescribed under the DTAAs OR as per 206AA - scope of provisions of section 90(2) - India – UK DTAA - override the DTAAs provisions - AO was of the view that the assessee ought to have TDS on remittances at the higher rate as per Section 206AA - HELD THAT:- Consideration before us is squarely covered in favour of the assessee by the decision of the Hon’ble Delhi High Court in the case of Danisco India (P) Ltd., Vs. UOI [2018 (2) TMI 1289 - DELHI HIGH COURT] as held section 206AA of the Act does not override the provisions of section 90(2) and that in the impugned cases of payments made to non-residents, assessee correctly applied the rate of tax prescribed under the DTAAs and not as per section 206AA because the provisions of the DTAAs was more beneficial. Thus, we hereby affirm the ultimate conclusion of the CIT(A) in deleting the tax demand relatable to difference between 20% and the actual tax rate on which tax was deducted by the assessee in terms of the relevant DTAAs. Double Taxation Avoidance Agreement acquires primacy in such cases, where reciprocating states mutually agree upon acceptable principles for tax treatment, the provision in Section 206AA (as it existed) has to be read down to mean that where the deductee i.e the overseas resident business concern conducts its operation from a territory, whose Government has entered into a Double Taxation Avoidance Agreement with India, the rate of taxation would be-a dictated by the provisions of the treaty. - Decided against revenue.
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