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2023 (7) TMI 500 - AT - Income TaxMaintainability of appeal before CIT(A) - Refund of excess TDS deducted - withholding of taxes - assessee has deducted tax at source at higher rate of 20% in the absence of PAN of the deductee - Payment made to US based entity which admittedly was in the nature of technical services, was to deducted tax @10% u/s 115A (plus applicable surcharge & education cess) - Applicable TDS rate 195 read with section 115A and Section 206AA HELD THAT:- As in a conjoint reading of Section 195 and Section 248, it could be clearly inferred that the term “no tax was required to be deducted’ will mean and include the tax deducted at source in excess of the tax deductible u/s. 195 at the rates in force. The term “no tax” was required to be deducted in excess of the rate as per DTAA being beneficial to the deductee assessee, then it has to be reckoned that the rates provided in the DTAA are beneficial, then benefit has to be given; and in such a situation the tax can only be deducted at the rate which is beneficial to the deducted and hence, it tantamount to denial of liability of tax or no tax which is in excess. The interpretation of Section 248 as given by the ld. CIT (A) and also as confessed before us by the ld. DR, if it is to be interpreted in such a manner, then it would lead to various anomalous situation. We hold that the deductor can challenge excess deduction u/s. 248 seeking that the rate of tax should be as per DTAA and not as per Section 206AA, if it is found that otherwise income is chargeable to tax in India and then certainly an appeal would be maintainable u/s. 248 seeking relief/refund for excess tax deducted. Thus, in our view, the word “no tax was required to be deducted” in Section 248 should be interpreted in such a manner so as to include claim of the deductor that no tax was required to be deducted in excess of deductible at rates in force. Section 197 provides that, assessee, here meant recipient deductee of the sum can approach the ld. AO to issue certificate for deduction of taxes at lower rate or for no deduction of tax. This Section 197 provides that the deductee or the recipient can approach to the ld. AO which here in this case deductee has not applied u/s. 197 and deductor has filed remedy of the appeal u/s. 248. Accordingly, we accept the contention of the ld. Counsel that appeal is maintainable and ld. AO is directed to apply rates in force which is the applicable rate of tax at 10% in accordance with law. Accordingly, the appeal of the assessee is allowed.
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