TMI Blog2018 (2) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... in-fact deducted income-tax @22.66% on all these foreign remittances while rate prescribed under the provisions of DTAA with France is lower @10% than the rate prescribed under provisions of Section 115A for making payments in the nature of technical fee. Thus assessee cannot be held to be an assessee in default within meaning of Section 201(1) and 201(1A) - Decided against revenue - I.T.A. No. 6424/Mum/2016 - - - Dated:- 29-1-2018 - SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER For The Assessee : None For The Revenue : Shri. Rajat Mittal ORDER PER RAMIT KOCHAR, Accountant Member This appeal, filed by Revenue, being ITA No. 6424/Mum/2016 for assessment year 2015-16 is directed against the appellate order dated 04.07.2016 passed by learned Commissioner of Income-tax (Appeals)-55, Mumbai (hereinafter called the CIT(A) ) for assessment year 2015-16, appellate proceedings had arisen before learned CIT(A) from the order dated 23.03.2015 passed by learned Assessing Officer (hereinafter called the AO ) u/s 201(1)and 201(1A) of the Income-tax Act, 1961 (hereinafter called the Act ). 2. The grounds of appeal raised by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO observed that the department has issued Press Release dated 20.01.2010 clarifying that all deductees, including non-residents having transaction in India are liable to TDS are advised to obtain PAN latest by 31.03.2010 and communicate the same to their deductors before income-tax is actually deducted on transaction after that date. The AO also relied upon the provisions of Section 2(37A)(iii) r.w.s 195 as well Section 90A, 195A, 206AA and 115A of the Act and came to the conclusion that assessee was required to deduct income-tax at source at the rate of 25.75% as provided u/s. 115A and not @ 20% as specified u/s 206AA, which led to the framing of the order dated 23.03.2015 passed by the AO u/s. 201(1) and 201(1A) wherein demand of ₹ 47,85,201/- was raised by the AO u/s. 201(1) on account of differential of the tax rate between the rate at which tax was required to be deducted by the assessee being 25.75% and the rate at which it was deducted by the assessee @22.66%, and further demand of ₹ 4,20,177/- was raised by the AO toward interest u/s. 201(1A) against the assessee, which was a consolidated demand for assessment year 2014-15 and 2015-16 vide common order dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITAT Bangalore and Pune also in its support: 1-DCIT V/S. Infosys BPO Ltd.-2015/60/Taxmann.COM 465 -Bangalore, 2-DDIT V /S. Serum Institute of India Ltd. -2015/56/Taxmann.COM 1-Pune 6. In this connection it is observed from the records that provisions of section 90 of I.T. Act, 1961 were also amended with effect from 1/4/2013 and provisions of sub section 90(4) and (5) were introduced which read as follows: Sub-Section 90(4) - An assessee, not being a resident, to whom an agreement referred to in sub-section (1) applies, shall not be entitled to claim any relief under such agreement unless .[a certificate of his being a resident] in any country outside India or specified territory outside India, as the case may be, is obtained by him from the Government of that country or specified territory.) Sub-Section 90(5)- The assessee referred to in sub-section (4) shall also provide such other documents and information, as may be prescribed.] This means that assessee was required to file tax residency certificates and details of the residential status of these non- resident entities along with form number 10FA and 10FB as mandated under rule 21AB of I.T. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellate order dated 4-07-2016 passed by learned CIT(A), the Revenue has come in an appeal before the tribunal and contentions were raised by Ld. DR by placing reliance on the order of the AO. Our attention was also drawn to page no. 10 of the learned CIT-A appellate order at para 5 which is the decision of the Ld. CIT-A reproduced here above. None appeared on behalf of the assessee when the appeal was called for hearing. 6. We have heard contentions of learned DR and perused the material on record . We have observed that assessee has made payments to non-residents detailed hereunder for relevant previous year on which income tax was deducted at source @22.66%( 20%+ surcharge+ education cess): Name of payee Country Nature of services Amount paid (Rs.) TDS deducted at 22.66%(Rs.) Date Atos Worldwide SAS France Corporate Fees 2,45,38,428 55,60,410 30/06/2014 Atos Worldwide SAS France Corporate Fees 3,53,33,319 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed u/s. 115A of the 1961 Act and not at the rate of 20% as the payees have not furnished their income-tax PAN. India has entered into DTAA with France wherein foreign remittances were sent during the relevant previous year which provided for following rate of taxes w.r.t. payment which are in the nature of fee for technical services, as under:- Country Tax Rate France 10% Thus, as could be seen that the rates provided under DTAA is lower than the rates of tax as provided u/s. 115AA on payments made towards fee for technical services to non-residents. The Ld. CIT-A in his appellate order has directed AO to verify whether the payees are entitled for benefits under DTAA as well whether the payees hold tax residences certificate of the respective country i.e. France as is mandated by the 1961 Act . The assessee has deducted income-tax at source at the rate of 22.66% ( 20% + surcharge and education cess) on the payments made toward fee for technical services to these non resident payees located in France as they have not furnished their income-tax Permanent account number (PAN). We have observed th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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