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2023 (1) TMI 173 - HC - Income TaxTDS provisions to be read along with DTAA for computing the tax liability - scope for deduction of tax @ 20% under Section 206AA - Whether Tribunal is right in law holding that the TDS provisions in the Act has to be read along with DTAA for computing the tax liability on the sum in question and therefore when the recipient is eligible for benefit of DTAA then there is no scope for deduction of tax @ 20% under Section 206AA when the assessing authority has rightly invoked said provision as conditions set out in said provisions are satisfied in case of assessee? HELD THAT:- It is not in dispute that the assessee has made payment towards technical services to various recipients in different countries as per DTAA with different countries. In the case of Danisco, the Delhi High Court has held that Section 206AA cannot be understood to override the charging Sections 4 and 5 of the Act. It has further held that the provision in Section 206-AA 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. Thus, we are in respectful agreement with the view taken by the Delhi high Court. As per the DTAA, the maximum deduction shall not exceed 10% which the assessee has deducted. Any other interpretation to permit the taxing authority to raise a demand beyond 10% would be incongruous. Also contended that if the law laid down in Danisco is to be applied, Section 206-AA of the Act would be rendered redundant. Such contention is untenable in the facts of this case because there exists DTAA and tax deduction has been made at source as mandated by the said agreement. Decided in favour of the assessee
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