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| The Tax Publishers2019 TaxPub(DT) 3889 (Del-Trib) INCOME TAX ACT, 1961
Section 206AA read with Section 90(2)
Where assessee deducted the tax at source at the rates prescribed in the respective DTAA between India and the relevant country of the non-residents, revenue was not justified in alleging that, in the absence of furnishing of PAN, the applicable rate of TDS was 20% in terms of section 206AA because section 90(2) overrides the provisions of section 206AA when provisions of DTAAs are more beneficial.
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Tax deduction at source - Failure to furnish PAN of payee - Tax deducted at rate prescribed under DTAA, instead of the rate prescribed under section 206AA -
AO raised demand of income tax on account of short deduction of TDS in terms of section 206AA. Assessee contended that it had deducted TDS at the rates prescribed under DTAA with respective countries of the non-residents, whereas web portal of revenue mechanically applied the rate of deduction to be 20% as prescribed under section 206AA, because payees did not hold PAN in India. Held: Section 90(2) provides that the provisions of the DTAAs would override the provisions of the domestic Act in cases where the provisions of DTAAs are more beneficial to the assessee. Accordingly, section 206AA does not override the provisions of section 90(2) and thus, in the cases of payments made to non-residents, assessee had correctly applied the rate of tax prescribed under the DTAAs because the provisions of the DTAAs were more beneficial.
Followed:Emmsons International Ltd. v. Dy. CIT (2018) 171 ITD 140 (Del) : 2018 TaxPub(DT) 4865 (Del-Trib)
REFERRED : GE India Technology Centre (P.) Ltd. v. CIT, MANU/SC/0688/2010 : (2010) 327 ITR 456 (SC) : 2010 TaxPub(DT) 2241 (SC) CIT v. Eli Lily & Co. (2009) 312 ITR 225 (SC) : 2009 TaxPub(DT) 1585 (SC) Azadi Bachao Andolan & Ors. v. UOI (2003) 263 ITR 706 (SC) : 2003 TaxPub(DT) 1429 (SC) Danisco India (P.) Ltd. v. UOI & Ors. (2018) 404 ITR 539 (Del) : 2018 TaxPub(DT) 0848 (Del-HC) Dy. DIT (IT-II), Pune. v. Serum Institute of India Ltd. [ITA Nos. 1601 to 1604/PN/2014] : 2015 TaxPub(DT) 1370 (Pune-Trib)
FAVOUR : In assessee's favour
A.Y. :
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