TMI Blog2015 (6) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... ses of payments made to non-residents, assessee correctly applied the rate of tax prescribed under the DTAAs and not as per section 206AA of the Act because the provisions of the DTAAs was more beneficial. Thus, we hereby affirm the ultimate conclusion of the CIT(A) in deleting the tax demand relatable to difference between 20% and the actual tax rate on which tax was deducted by the assessee in terms of the relevant DTAAs - Decided against revenue. - ITA No.792/PN/2013, ITA Nos.1601 to 1604/PN/2014 - - - Dated:- 30-3-2015 - SHRI G.S. PANNU AND AND MS. SUSHMA CHOWLA, JJ. For The Department : Shri B. C. Malakar For The Assessee : Shri Rajan Vora ORDER PER G. S. PANNU, AM ITA Nos.1601 to 1604/PN/2014 are four appeals by the Revenue directed against a consolidated order of the Commissioner of Income Tax (Appeals)-IT/TP, Pune dated 28.01.2013 which, in turn, has arisen from four separate orders passed by the Assessing Officer u/s 200A of the Income-tax Act, 1961 (in short the Act ) for 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 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hnical 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 deductible at the rate specified in the relevant provisions of the Act or at the rates in force or at the rate of 20%. On the strength of section 206AA of the Act, Revenue treated payments to those non-residents who did not furnish the PAN as cases of short deduction being difference between 20% and the actual tax rate on which tax was deducted in terms of the relevant DTAAs. As a consequence, demands were raised on the assessee for the short deduction of tax and also for interest u/s 201(1A) of the Act. The aforesaid dispute was carried by the assessee in appeal before the CIT(A). 4. In appeal before the CIT(A), assessee raised varied arguments. Assessee submitted that the provisions of section 206AA are not applicable to payments made to non-residents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of furnishing of PANs by the recipient non-residents. According to the Ld. Departmental Representative, the CIT(A) had himself concluded that section 206AA of the Act required even the non-resident recipients of income to obtain and furnish PAN to the dedutors of the tax at source, being the assessee in the present case. 6. On the other hand, the Ld. Representative for the respondent-assessee has defended the ultimate conclusion of the CIT(A) that section 206AA of the Act would not override the provisions contained in section 90(2) of the Act. 7. We have carefully considered 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 the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 5 of the Act which deals with the principle of ascertainment of total income under the Act are also subordinate to the principle enshrined in section 90(2) as held by the Hon ble Supreme Court in the case of Azadi Bachao Andolan and Others (supra). Thus, in so far as the applicability of the scope/rate of taxation with respect to the impugned payments make to the non-residents is concerned, no fault can be found with the rate of taxation invoked by the assessee based on the DTAAs, which prescribed for a beneficial rate of taxation. However, the case of the Revenue is that the tax deduction at source was required to be made at 20% in the absence of furnishing of PAN by the recipient non-residents, having regard to section 206AA of the Act. In our considered opinion, it would be quite incorrect to say that though the charging section 4 of the Act and section 5 of the Act dealing with ascertainment of total income are subordinate to the principle enshrined in section 90(2) of the Act but the provisions of Chapter XVII-B governing tax deduction at source are not subordinate to section 90(2) of the Act. Notably, section 206AA of the Act which is the centre of controversy before us i ..... 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