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TMI Blog2015 (6) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... r Quarter 1 to Quarter 4 of assessment year 2011-12. Initially, Revenue had filed a single appeal vide ITA No.792/PN/2013 assailing the combined order of the CIT(A) passed in relation to four orders passed by the Assessing Officer u/s 200A of the Act. Subsequently, Revenue has rectified and filed four separate appeals in ITA Nos.1601 to 1604/PN/2014 and accordingly the initial appeal vide ITA No.792/PN/2013 is rendered infructuous. 2. In all the appeals i.e. ITA Nos.1601 to 1604/PN/2014, Revenue has raised common Grounds of Appeal which read as under :- "1) The CIT(A) erred in law in concluding that sec 206AA is not applicable in case of non-residents as the DTAA overrides the Act as per section 90(2). 2) The decision of the CIT(A) is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded in the DTAAs was lower than the rate prescribed under the Act and therefore in terms of the provisions of section 90(2) of the Act, the tax was deducted at source by applying the beneficial rate prescribed under the relevant DTAAs. It was noted by the Revenue that on account of payment of royalty and fee for technical services in case of some of the non-residents, the recipients did not have Permanent Account Numbers (PANs). As a consequence, Revenue treated such payments, as cases of 'short deduction' of tax in terms of the provisions of section 206AA of the Act. Notably, section 206AA prescribes that if the recipient of any sum or income fails to furnish his PAN to the person responsible for deduction tax at source, the tax shall be d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribed in the relevant DTAAs, as the rates prescribed in the DTAAs were beneficial. In support of such a stand, assessee relied upon the provisions of section 90(2) of the Act, which prescribe that provisions of the Act are applicable to the extent that they are more beneficial to the assessee and since section 206AA of the Act prescribed higher rate of withholding tax, it would not be beneficial to the assessee vis-à-vis the rates prescribed in the DTAAs. The CIT(A) did not agree with the assessee on the point that the nonresidents recipient are not required to obtain PAN. So however, with respect to the second plea of the assessee, CIT(A) concurred with the assessee and held that section 206AA of the Act would override other provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered the rival submissions. Section 206AA of the Act has been included in Part B of Chapter XVII dealing with Collection and Recovery of Tax - Deduction at source. Section 206AA of the Act deals with requirements of furnishing PAN by any person, entitled to receive any sum or income on which tax is deductible under Chapter XVII-B, to the person responsible for deducting such tax. Shorn of other details, in so far as the present controversy is concerned, it would suffice to note that section 206AA of the Act prescribes that where PAN is not furnished to the person responsible for deducting tax at source then the tax deductor would be required to deduct tax at the higher of the following rates, namely, at the rate prescribed in the relevan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Azadi Bachao Andolan and Others vs. UOI, (2003) 263 ITR 706 (SC) has upheld the proposition that the provisions made in the DTAAs will prevail over the general provisions contained in the Act to the extent they are beneficial to the assessee. In this context, it would be worthwhile to observe that the DTAAs entered into between India and the other relevant countries in the present context provide for scope of taxation and/or a rate of taxation which was different from the scope/rate prescribed under the Act. For the said reason, assessee deducted the tax at source having regard to the provisions of the respective DTAAs which provided for a beneficial rate of taxation. It would also be relevant to observe that even the charging section 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing provision. In-fact, in the context of section 195 of the Act also, the Hon'ble Supreme Court in the case of CIT vs. Eli Lily & Co., (2009) 312 ITR 225 (SC) observed that the provisions of tax withholding i.e. section 195 of the Act would apply only to sums which are otherwise chargeable to tax under the Act. The Hon'ble Supreme Court in the case of GE India Technology Centre Pvt. Ltd. vs. CIT, (2010) 327 ITR 456 (SC) held that the provisions of DTAAs along with the sections 4, 5, 9, 90 & 91 of the Act are relevant while applying the provisions of tax deduction at source. Therefore, in view of the aforesaid schematic interpretation of the Act, section 206AA of the Act cannot be understood to override the charging sections 4 and 5 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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