Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2023 (10) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (10) TMI 1185 - AT - Income TaxWithholding tax - Intimation u/s 201 - Effect of protocol signed at the time of conclusion of the principal tax treaty - Relevant notification yet to be issued by the Government - rate of tax to be deducted at source on the payment of fees for technical services by the assessee to TDK Electronics Components SA - rate of withholding tax as per the provisions of Income-tax Act, 1961 OR rate specified in the relevant 'tax treaty' entered into between India and Spain read with the protocol entered into with the members of the OECD - As per assessee in view of the provisions of Article 13 read with Protocol appended below the Indo-Spain tax treaty which forms an integral part of tax treaty from Assessment Year 2018-19 and onwards and as the treaty rate is more favourable to the assessee, the assessee was required to deduct tax at source under the head FTS @ 10% HELD THAT:- As in view of the decision of this tribunal in the case of ITC Ltd [2001 (12) TMI 196 - ITAT CALCUTTA-A] Tribunal has held that the protocol to the DTAA is an integral and indispensable part of the tax treaty and furthermore, the benefit of lower rate as prescribed in the protocol for fees for technical services under the relevant tax Treaty is not dependent on any further unilateral action or issuance of notification by the respective Governments. As also held by this Tribunal that no separate notification is required to be issued by the Government of India in order to make a protocol applicable. We find merit in the contention of assessee that as per the DTAA entered into between India and Spain read with the protocol entered into with the members of the OECD, tax rate of 10% was applicable on the payment for fees for technical services. To this extent, relevant grounds raised by the assessee are allowed. As 10% tax rate as per the DTAA includes surcharge and education cess and no separate surcharge of education cess needs to be added - We find that it has been well settled that in case the rate of tax are adopted as per the DTAA, then no surcharge and education cess is to be applied over and above the tax rate since the tax rate as per the DTAA is held to be all-inclusive of such surcharge and education cess. Since the rate of tax applicable in the case of the assessee is 10% and not 10.608% and since the assessee has rightly deducted the tax at source @ 10%, it cannot be treated as an assessee in default and accordingly the excess amount of tax demanded by the revenue authorities is deleted. Further as tax demand has been deleted, the interest levied also stands deleted being consequential in nature. Accordingly, all the effective grounds raised by the assessee in the instant bunch of appeal stands allowed.
|