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TMI Blog2017 (2) TMI 642X X X X Extracts X X X X X X X X Extracts X X X X ..... he case and in law, the CIT(A) erred in upholding the action of the DCIT, CPC, TDS passed under section 200Aof the Act by relying on the Press Release No.402/92/2006-MC(04 of 2010) dated 20.01.2010 issued by CBDT requiring that all deductors who are liable to deduct tax are required to deduct tax at a higher rate in all transactions not having PAN of the deductee on or after 1st April 2010. 2. In doing so, the Hon'ble Commissioner of Income Tax (Appeals) erred in the following respects: 2.1 In not appreciating the fact that the appellant paid the consideration to Kracht + Strohe Rechtsanwalte Koln AUER Gmbh ("KSR") a German Law Firm against legal services and deducted tax @ 10% as fee for technical services under Article 12 of the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in appeal no. CIT(A)/VLS/2050/2013 vide order dated 28th May, 2015 which was decided against the assessee. The decision of the ld. CIT(A) is reproduced as under:- "6. Decision: I have carefully considered the facts of the case as contained in the order - passed by the assessing officer as well as the written submission made by AR of the appellant during the appellate proceedings. Originally the DCIT CPC-TDS processed the TDS statement of the appellant and created a demand of Rs. 90,750/- including interest of Rs. 12,512/- for short deduction of TDS @10% instead of 20.6% applicable in this case and issued an intimation dt:01.03.2013. The appellant preferred an rectification application u/s 154 of the Act of this intimation/order dt: 01 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the payment as a case of short deduction. Section 206AA prescribes that if the recipient of any sum or income fails to furnish his PAN to the person responsible for deduction of tax at source, the tax is required to be deducted @ 20%. In addition the appellant also made the submission that section 90(2) of the Act gives the tax payer an option to select the applicability of provisions of tax treaty or Income Tax Act whichever is beneficiary to him. In view of this the appellant choose DTAA. In addition it was also submitted that section 90(2) of the Act i.e. DTAA overrides section 206AA in case of payments/remittances to non-residents. For this reliance was placed on the judicial decision of Hon'ble ITAT Pune in the case of DDFT Pun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lower rate or no deduction shall not be given by the Assessing Officer under section 197, or declaration by deductee under section 197A for non-deduction of TDS on payments shall not be valid, unless the application bears PAN of the applicant/deductee. 2. All deductors are liable to deduct tax at the higher rate in all transaction not having PAN of the deductee on or after 1st April, 2010. In order that there is no dispute regarding quoting/non-quoting of PAN or accuracy thereof, the law requires all deductees and deductors to quote PAN of deductees in all correspondences, bills, vouchers and other documents sent to each other. All deductors are, therefore, advised to intimate their deductees to obtain and furnish their PAN so as to avoid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e itself pertaining to assessment year 2014-15 has decided the identical issue in favor of the assessee. On other hand, ld. departmental representative relied on the order of the CIT(A). 6. We have heard both the sides and perused the material on record. We noticed that during the year under reference the assessee had received legal services from Kracht+Strohe Rechtsanwalte Koln a law firm of Germany. In accordance with the Article 12 of the Double Taxation Avoidance Agreement between India and Germany the assessee had deducted TDS @ 10% of Rs. 73,804/- as the remittance was made equivalent to Indian Rs. 7,38,045/-. Thereafter, DCIT CPC TDS, Vaishali Gajiabad made rectification u/s. 154 of the act raising demand of Rs. 90,750/- including i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich provides a higher tax burden- i.e. taxability @ 20% in the event of foreign entity not obtaining the permanent account number in India, therefore, cannot be pressed into service, as has been done in the course of processing of return under section 200A. To that extent, short deduction of tax at source demand, raised in the course of processing of TDS return under section 200A, is unsustainable in law. We quash this short deduction of tax at source demand. The grievance of the assessee is indeed justified, merits acceptance and is hereby upheld." 6.2 We noticed that the assessee had deducted the tax at source at the rates prescribed in respective DTAAs between India and Germany at the prescribed rate of 10%. We have also considered tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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