TMI Blog2018 (4) TMI 1936X X X X Extracts X X X X X X X X Extracts X X X X ..... payments made to non-residents, assessee correctly applied the rate of tax prescribed under the DTAAs and not as per section 206AA of the Act because 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. The views so expressed by the coordinate bench now stand approved by Hon ble Delhi High Court s judgment in the case of Dansico India Pvt. Ltd. [ 2018 (2) TMI 1289 - DELHI HIGH COURT ] No judicial precedent to the contrary has been brought to our notice. In this view of the mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 06AA of Income Tax Act applies to Non-Residents and also ignoring the Press Release of CBDT No.402/92/2006-MC (04 of 2010) dated 20/1/2010 which reiterates that Sec.206AA of Income Tax Act will also apply to all Non-Residents in respect of payments/remittance liable to TDS where PAN is not provide to the deductor? (iii) whether the Ld. ClT(A) has erred in law and on facts of the case in relying upon the decision which were rendered before the introduction of Sec.206AA of the I.T. Act? 3 . Any other grounds that may be urged at the time of hearing. 2. At the time of hearing before us, learned representatives fairly agree that the issue in appeal is now covered, in favour of the assessee, by a large number of judicial precede ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orn of other details, in so far as the present controversy is concerned, it would suffice to note that section 206AA of the Act prescribes that where PAN is not furnished to the person responsible for deducting tax at source then the tax deductor would be required to deduct tax at the higher of the following rates, namely, at the rate prescribed in the relevant provisions of this Act; or at the rate/rates in force; or at the rate of 20%. In the present case, assessee was responsible for deducting tax on payments made to non-residents on account of royalty and/or fee for technical services. The dispute before us relates to the payments made by the assessee to such non-residents who had not furnished their PANs to the assessee. The case of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. vs. CIT, (2010) 327 ITR 456 (SC) held that the provisions of DTAAs along with the sections 4, 5, 9, 90 91 of the Act are relevant while applying the provisions of tax deduction at source. Therefore, in view of the aforesaid schematic interpretation of the Act, section 206AA of the Act cannot be understood to override the charging sections 4 and 5 of the Act. Thus, where section 90(2) of the Act provides that DTAAs override domestic law in cases where the provisions of DTAAs are more beneficial to the assessee and the same also overrides the charging sections 4 and 5 of the Act which, in turn, override the DTAAs provisions especially section 206AA of the Act which is the controversy before us. Therefore, in our view, where the tax has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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