TMI Blog2021 (4) TMI 1190X X X X Extracts X X X X X X X X Extracts X X X X ..... r equipment used in connection with the operation of ships or aircrafts in international traffic; the assessee is entitled for beneficial provisions of DTAA. So, following the order passed by the coordinate Bench of the Tribunal in cases of DDIT (IT-II), Pune vs. Serum Institute of India Ltd. [ 2015 (6) TMI 26 - ITAT PUNE] , DCIT vs. M/s. Infosys BPO Ltd. [ 2020 (1) TMI 1011 - ITAT BANGALORE] and the judgment of Hon ble Delhi High Court in case of Danisco India Pvt. Ltd. vs. UOI[ 2018 (2) TMI 1289 - DELHI HIGH COURT] we are of the considered view that ld. CIT (A) has erred in holding that in this case, provisions contained u/s 206AA overrides beneficial provisions of DTAA between India and Neitherland. Consequently, assessee has rightly deducted the tax @ 10% as per provisions contained under DTAA as section 206AA cannot have overriding effect on DTAA, hence no demand is payable by the assessee. Hence, question framed is decided in favour of the assessee. - ITA No.2260/Del./2017, ITA No.2261/Del./2017, ITA No.2262/Del./2017 - - - Dated:- 23-4-2021 - Shri Anil Chaturvedi, Accountant Member And Shri Kuldip Singh, Judicial Member For the Assessee : Shri Rajiv Pal Puri, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quarter, third quarter and fourth quarter of FY 2012-13. 4. It is also intimated by way of notice u/s 154 of the Act that there is demand of short deduction of ₹ 73,00,719.77, ₹ 80,82,662.74 ₹ 57,05,582.11 for second quarter, third quarter and fourth quarter of FY 2012-13 respectively on account of non-provision of PAN in case of Engine Lease Finance B.V. (ELFC), a non-resident company, taxed resident in Neitherland, which was not mentioned at the time of return as the foreign company did not have PAN. Assessee claimed to have taken an engine on lease under an Agreement from Engine Lease Finance B.V. and by mistake unknowingly deposited the tax at 2.31% on various payments made to them during the year under consideration by treating the same as an Indian company, whereas taxes liable to be deducted are to be absorbed by the lessee. So, the assessee has not deducted the TDS from the payment but has deposited from their account and absorbed it as cost. 5. Assessee carried the matter before the ld. CIT (A) by way of filing the appeals who has confirmed the demands by dismissing the appeals. Feeling aggrieved by the order passed by the ld. CIT (A), the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of DTAA and secondly, DTAA overrides domestic law in case of taxpayer only and not in case of the deductor as in the instant case. 10. In reply to the aforesaid view taken by the ld. CIT (A), the ld. AR for the assessee relied upon the orders passed by the coordinate Bench of the Tribunal in case of DDIT (IT-II), Pune vs. Serum Institute of India Ltd. in ITA Nos792/PN/2013 ITA Nos.1601 to 1604//PN/2014 order dated 30.03.2015, DCIT vs. M/s. Infosys BPO Ltd. in ITA Nos.1333/Bang/2014 order dated 27.09.2019 and the judgment of Hon ble Delhi High Court in case of Danisco India Pvt. Ltd. vs. UOI (2018) 404 ITR 539 (Delhi). 11. Coordinate Bench of the Tribunal in case of Serum Institute of India Ltd. (supra) decided the identical issue as to nonapplicability of section 206AA in case of non-resident as DTAA overrides the Act as per Section 90(2) by returning following findings :- 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present context provide for scope of taxation and/or a rate of taxation which was different from the scope/rate prescribed under the Act. For the said reason, assessee deducted the tax at source having regard to the provisions of the respective DTAAs which provided for a beneficial rate of taxation. It would also be relevant to observe that even the charging section 4 as well as section 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 nonresidents 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DTAAs and not as per section 206AA of the Act because ITA Nos.1601 to 1604/PN/2014 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. As a consequence, Revenue fails in its appeals. 12. Aforesaid view taken by the Tribunal that second 206AA of the Act does not override the provisions of section 90(2) of the Act and in case of payment made to non-resident, rates as prescribed under DTAA are applicable has been affirmed by Hon ble Delhi High Court in case of Danisco India Pvt. Ltd. (supra) by returning following findings :- 8. Having regard to the position of law explained in Azadi Bachao Andolan (supra) and later followed in numerous decisions that a Double Taxation Avoidance Agreement acquires primacy in such cases, where reciprocating states mutually agree upon acceptable principles for tax treatment, the provision in Section 206AA (as it existed) has to be read down to mean that where the deductee i.e the overseas resident business concern conducts it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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