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2016 (1) TMI 73 - ITAT CHENNAI

2016 (1) TMI 73 - ITAT CHENNAI - TMI - TDS u/s 195 - payment to non-resident - TDS either @ 10% or @ 20% - assessee in default - assessee has not produced the Permanent Account Number of the recipients for deducting tax @ 10% - the ld. Representative submitted that the ‘non-resident’ means a person who is not a resident in India. In this case, admittedly, the recipients are not residents in India, therefore, there is no obligation to obtain Permanent Account Number u/s 139A of the Act. Since the .....

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provisions of Chapter XVII of the Act. Sec. 206AA of the Act also falls in Chapter XVII. In view of the specific provision in sec. 206AA which provides for deduction of tax @ 20% wherever the recipient failed to furnish the Permanent Account Number, this Tribunal is of the considered opinion that in view of the language used by the Parliament “notwithstanding anything contained in any other provisions of this Act”, sec.206AA would override the other provisions of the Income-tax Act, including se .....

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RI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER For The Appellant : Shri T.G. Suresh, CA For The Respondent : Shri A.V. Sreekanth, JCIT ORDER PER N.R.S.GANESAN, JUDICIAL MEMBER All three appeals of the assessee are directed against the respective orders of the Commissioner of Income-tax (Appeals), Chennai, for the assessment years 2013-14, 2012-13 and 2011-12. Since common issue arises for consideration in all the appeals, we heard them together and disposing of the same by this common order. 2. Shri .....

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sessee has also made payments to M/s Sapient In-Vitro Ltd., Australia and M/s Down Under Fertility Services Pty. Ltd., Australia after deducting tax @ 10%. However, the Assessing Officer treated the assessee as an assessee in default on the ground that the assessee has not produced the Permanent Account Number of the recipients for deducting tax @ 10%. In the absence of any Permanent Account Number, the Assessing Officer found that the assessee ought to have deducted tax @ 20%. Referring to sect .....

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India. In this case, admittedly, the recipients are not residents in India, therefore, there is no obligation to obtain Permanent Account Number u/s 139A of the Act. Since there was no obligation to obtain Permanent Account Number, according to the ld. Representative, sec. 206AA of the Act is not applicable. 3. According to the ld. Representative of the assessee, sec. 206AA of the Act was introduced by Finance Act, 2009, with an object of improving collection of taxes at source. The object of s .....

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(8) r.w. rule 114C of Income-tax Rules, is a special provision providing a category of persons exempting from getting Permanent Account Number. Therefore, sec. 139A(8) r.w.rule 114C would prevail over sec. 206AA of the Act. The ld. Representative further submitted that the non-resident recipients, in fact, obtained the Permanent Account Number on 27.2.2013 during the same financial year. According to the ld. Representative, Permanent Account Number was not available only for a part of the year u .....

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time of making payments. According to the ld. Representative, the provisions contained in sec. 139A(8)(d) r.w.r 114C will override the provisions of sec. 206AA of the Act. 4. According to the ld. Representative, sec. 206AA(1) of the Act does not impose any obligation to obtain Permanent Account Number. This section provides to furnish Permanent Account Number to the deductor. In the absence of any obligation for obtaining Permanent Account Number either u/s 139A or u/s 206AA of the Act, the asse .....

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t Number then deduction of tax @ 10% would meet the requirements. In the absence of any Permanent Account Number, this section requires the assessee to deduct tax @ 20%. In this case, according to the ld. Representative, there is no obligation on the recipients, namely, non-resident companies, to obtain Permanent Account Number u/s 139A r.w.rule 114C. Therefore, there is no question of deduction of tax @ 20%. Even otherwise, in the very same financial year i.e on 27.2.2013, the non-residents obt .....

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received by the non-resident companies is taxable in India. Hence, the assessee has to necessarily deduct tax while making the payment. 7. Now the question arises for consideration is whether the tax has to be deducted @ 20% or @ 10%. The assessee claims that the non-resident companies need not to obtain the Permanent Account Number u/s 139A r.w.rule 114C of the Income-tax Rules. Referring to sec. 206AA of the Act, the ld. DR submitted that this section starts with Notwithstanding anything cont .....

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btaining Permanent Account Number is only a procedural formality is misconstrued. According to the ld. DR, the Assessing Officer by placing reliance on the decision of the Bangalore Bench of this Tribunal in the case of Bosch vs CIT, 28 Taxmann.com 228, found that the provisions of sec. 206AA would override the other provisions of the Income-tax Act, 1961. Therefore, the assessee was rightly treated as an assessee in default . 8. We have considered the rival submissions on either side and also p .....

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applicability of sec. 206AA of the Act. 9. We have gone through the provisions of sec. 206AA of the Act which reads as follows: 206AA-REQUIREMENT TO FURNISH PERMANENT ACCOUNT NUMBER (1) Notwithstanding anything contained in any other provisions of this Act, any person entitled to receive any sum or income or amount, on which tax is deductible under Chapter XVII-B (hereafter referred to as deductee) shall furnish his Permanent Account Number to the person responsible for deducting such tax (here .....

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