Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2020 (10) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (10) TMI 1078 - AT - Income TaxTDS u/s 195 - Rates specified in Section 206AA - plea of the Assessee that the payments made to non-resident were not chargeable to tax and therefore the Assessee was not under any obligation to deduct TDS - Requirement to furnish Permanent Account Number - rate at which tax has to be deducted is not at higher rate as prescribed by Sec. 206AA at the rate applicable as per the Treaty for Double Taxation Avoidance (DTAA) between India and the country of which the payees were tax residents - whether Sec. 206AA of the Act has a non obstante clause and therefore it overrides the rates prescribed in DTAA? - whether the assessee has to deduct tax at source at the rates prescribed in section 206AA in case the payees are unable to furnish their PANs, even in cases where tax liability arises out of the treat? HELD THAT:- As in the case of Sanofi Pasteur [2013 (2) TMI 589 - HIGH COURT OF ANDHRA PRADESH] as observed that DTAA being a sovereign matter, the machinery provisions cannot override or control that. Reliance was also placed on the decision of the Hon'ble Karnataka High Court in the case of Kaushallaya Bai [2012 (6) TMI 451 - KARNATAKA HIGH COURT ] wherein it has held that the provisions of section 206AA are to be read down. The Special Bench held that DTAA overrides the Act, even if it is inconsistent with the Act. DTAAs are entered into between two nations in good faith and are supposed to be interpreted in good faith. Otherwise it would amount to the breach of Article 253 of the constitution. As in the case of Danisco India Private Limited [2018 (2) TMI 1289 - DELHI HIGH COURT ] held that 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 merit in the appeals of the Revenue
|