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2022 (8) TMI 40 - HC - Income TaxRate of deduction of tax in the case of a non-resident who does not have a PAN - provisions of Section 206AA overrides the provisions of the Double Tax Avoidance Agreement or not? - DTAA between India and Netherlands - Whether case does not lie in the exceptions laid down in Sub-Section 7 of Section 206AA of the Act shall be the rate prescribed in the DTAA if such rate is lower than the rate specified in the relevant provisions of the Act and not as per the provisions of Section 206AA? - HELD THAT:- A perusal of the paper book reveals that in the present case the ITAT has held that it is not in dispute that the engine is a part of aircraft and cannot be said to be an aircraft and the payment being made for rent of engine can be covered under equipment as per Article 12(4) of the DTAA between India and Netherlands. The ITAT has also held that the ELFC, the lessor, is a foreign company having no permanent establishment and was a tax resident of Netherland. It is not in dispute that assessee has not deducted this TDS from the payment but has deposited from their own account and has absorbed it as cost. It is also not in dispute that since payee, ELFC, being a foreign company having no PAN, the assessee reported the transaction without PAN in the quarterly TDS statements. This Court is in agreement with the view of the Tribunal that the issues of law sought to be raised in the present appeal are squarely covered by the judgment of this Court in Danisco India (P.) Ltd. [2018 (2) TMI 1289 - DELHI HIGH COURT]. as held 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 as dictated by the provisions of the treaty - no substantial question of law arises.
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