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2017 (2) TMI 642 - ITAT AHMEDABAD

2017 (2) TMI 642 - ITAT AHMEDABAD - TMI - Higher rate of TDS @20% for non-furnishing of PAN - proceedings under section 200A - whether cannot be at a rate prescribed u/s 206AA which is higher than the rate at which the relevant income is chargeable to tax under Act or DTAA - DTAA between India and GermanyHeld that:- As decided in the case of Infosys BPO Ltd [2015 (9) TMI 792 - ITAT BANGALORE ] in which it was held that the provisions of IT Act, 1961 cannot override the provisions of DTAA. - .....

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In view of the above stated facts and legal findings, in our considered opinion the ld. CIT(A) has not substantiated the sustaining of impugned demand raised by the assessing officer ,therefore, we allow the appeal of the assessee. - ITA No. 947/Ahd/2016 - Dated:- 6-2-2017 - R. P. Tolani, Judicial Member And Shri Amarjit Singh, Accountant Member For The Revenue : Shri Dileep Kumar, Sr. D.R. For The Assessee : Shri S.N. Soparkar, A.R. ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:- This assessee s .....

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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 @ .....

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rohe Rechtsanwalte Koln, a law firm having principal place of business at Germany. The assessee had remitted a sum amounting EURO 10,395/- equivalent to Indian ₹ 7,38,045/- on December, 2012. In accordance with article 12 fee for technical services of DTAA between India and Germany, the assessee had deducted TDS @ 10% to the amount of ₹ 73,804/- and deposited the same on 5th January, 2013. Subsequently, the DCIT CPC TDS, Vaishali, Gajiabad raised a demand of ₹ 90,750/- includin .....

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of the assessee was identical to the own case of the assessee decided 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 s .....

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est of ₹ 12,512/-. The appellant preferred an appeal against the intimation dt: 01.03.2013 as well as rectification order dt: 01.03.2014. In the present appeal the core facts are the same as were present in the appellant's own case in Appeal No. CIT(A)/VLS/250/13-14 vide order dt:28.05.2015, which was decided against the appellant by following an earlier decision on the same taken in ITA NO.CIT(A)/VLS/215/13-14 which is enumerated below: "This is a case of short deduction of TDS. .....

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TAA), the income from aforesaid sale of Technical Knowhow is not chargeable to tax in India. Further it was submitted that although the transaction is not liable to TDS yet the appellant has as an abundant precaution deducted TDS @10% against the alleged rate of 20%. DCIT CPC-TDS vide intimation dt: 01.12.2013 u/s200A of the Act treated 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 .....

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was placed on the judicial decision of Hon'ble ITAT Pune in the case of DDFT Pune v/s Serum Institute of India Limited. It was also submitted that provisions of section 139A(8) of the Act r.w. rule 114C(1) of IT Rules, 1962 prescribed that non-residents are not required to apply for PAN. Section 206AA prescribes that the recipient shall furnish the PAN and such furnishing would be possible only where the recipient required to obtain -PAN. Thus, where the non-residents are not obliged to obt .....

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release No.402/92/2006- MC(04 OF 2010) dt:20.01.2010. The relevant portion of this press release is given below: "A new provision relating to tax deduction at source (TDS) under the Income Tax Act, 1961 will become applicable with effect from 1st April, 2010. Tax at higher of the prescribed rate or 20% will be deducted on all transactions liable to TDS, where the Permanent Account Number (PAN) of the deductee is not available. The law will also apply to all non-residents in respect of payme .....

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s 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 TDS at higher rate. All deductees, including non-residents having transactions in India liable to TDS, are advised to obtain PAN by 31st March, 2010 and communicate .....

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T(A) vide order dt:28.05.2015, the Bangalore Bench of ITAT in the case of Infosys BPO Ltd. vide order dt:29.06.2015 has held that provisions of IT Act cannot override the provisions of the Double Taxation Avoidance Agreement (DTAA) and the tax liability of the non-resident cannot exceed the rate prescribed in the relevant DTAA. Hoever, the issue has already been decided, keeping in view the facts and (aw of the case, so following the principle of consistency I do not feel any "need to inter .....

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ive 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 ₹ 73,804/- as the remittance was made equivalent to Indian ₹ 7,38,045/-. Thereafter, DCIT .....

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nch of ITAT decision dated 29/06/2015 in the case of Infosys BPO Ltd in which it was held that the provisions of IT Act, 1961 cannot override the provisions of DTAA. 6.1 We also find that the Co-ordinate Bench of the ITAT Ahmedabad in the case of the assessee itself pertaining to assessment year 2014-05 vide ITA No. 1974/Ahd/2015 decided the identical issue in favour of the assessee on 30/09/2019. The relevant part of the decision is reproduced as under:- [4] It is only elementary that, under th .....

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