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2018 (2) TMI 106 - AT - Income TaxDefault u/s 201(1) and 201(1A) - Withholding of tax at higher of the rates prescribed under section 206AA - applicability of section 115A on the payments made by the assessee to non-resident payees who did not have PAN - DTAA benefits - deduct income-tax at source at the rate of 25.75% as provided u/s. 115A OR @ 20% as specified u/s 206AA - Held that:- The issue is no more res-integra and in the case of Nagarjuna Fertilizers and Chemicals Ltd. v. ACIT (2017 (3) TMI 81 - ITAT HYDERABAD) has taken a view that provision of section 206AA will not have an overriding effect over the provisions of the 1961 Act and if the provision of DTAA are beneficial to the assessee they will override provisions of Section 206AA by virtue of provisions of Section 90(2). No infirmity in the order of learned CIT(A) in directing AO to verify whether the payees are entitled for benefits of DTAA and also whether they hold the tax-residency certificate as is required by the provisions of the 1961 Act, which directions of learned CIT(A) we affirm/sustain . It is also on record that the assessee has in-fact deducted income-tax @22.66% on all these foreign remittances while rate prescribed under the provisions of DTAA with France is lower @10% than the rate prescribed under provisions of Section 115A for making payments in the nature of technical fee. Thus assessee cannot be held to be an assessee in default within meaning of Section 201(1) and 201(1A) - Decided against revenue
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