The Tax Publishers2017 TaxPub(DT) 1437 (Hyd-Trib)

 

Dy. CIT v. Aurobindo Pharma Ltd.

 

INCOME TAX ACT, 1961

--Tax deduction at source--Short deductionFiling of Form 27Q without mentioning PAN --Higher rate to be applied or not--The provisions of section 206AA cannot be applied to the cases of payments made to non-residents without PAN who are residents in the countries with which India has Double Taxation Avoidance Agreement (DTAA) as the provisions of DTAA prevail over the provisions of Income Tax Act.--Assessee had paid certain amounts to non-residents and TDS had been made under section 195 at 10% of the amount invoking the provisions of Double Taxation Avoidance Agreement (DTAA) with respect to countries to which non-residents belong. Assessee filed the returns of TDS in Form No. 27Q for all the four quarters in respective assessment years. AO applied 20% of deduction rate under section 195, since no Permanent Account Number of the deductees were available in the relevant columns of the returns. AO accordingly arrived at a short deduction of tax and charged interest. Held: AO was directed to verify the deductions made in respect of the payments made to the above parties where DTAA was applicable and if the deductions were in accordance with the rates specified in the respective DTAAs agreement, the AO was directed to reduce the demand in respect of the above parties by adopting the rate as applicable in the respective DTAA agreements.

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