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2022 (4) TMI 1489 - AT - Income TaxTDS u/s 195 - payments made to Infosys China is liable for tax deduction u/s 9(1)(vii) of the I.T.Act, as fees for technical services (FTS) - order passed u/s 201(1) and 201(1A) - CIT(A) held that the payments made by the assessee to Infosys China is both liable as FTS and royalty under the domestic law as well under the relevant DTAA - HELD THAT:- The Special Bench of the Tribunal in the case of Nagarjuna Fertilizders and Chemicals Ltd. [2017 (3) TMI 81 - ITAT HYDERABAD] had held if rate of tax applicable under DTAA is lower than 20% tax rate prescribed u/s 206AA of the Act, TDS has to be deducted at such lower rate even if non-resident deductee fails to furnish its PAN. Further, the Hon’ble Delhi High Court in the case of Danisco India P. Ltd. [2018 (2) TMI 1289 - DELHI HIGH COURT] had held that provisions of DTAA override section 206AA of the Act. In view of the above cited judicial pronouncements, we hold that the applicable TDS on subcontracting charges paid to Infosys China should be considered at 10% as per the India-China DTAA instead of 20% as per section 206AA of the I.T.Act. It is also to be noted that while passing the order u/s 201(1) and 201(1A) of the Act for assessment year 2012-2013, the Assessing Officer has calculated TDS liability at 10% as per the Indo-China DTAA. Therefore, ground is allowed.
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