| |
| The Tax Publishers2020 TaxPub(DT) 2649 (Bang-Trib) INCOME TAX ACT, 1961
Section 206AA
Where reciprocating States mutually agree upon acceptable principles for tax treatment, provision in section 206AA had to be read down to mean that where deductee, i.e., overseas resident business concern conducts its operation from a territory, whose Government has entered into a DTAA with India, the rate of taxation would be as dictated by the provisions of the treaty. Accordingly, in case of non-residents without PAN rate of TDS will not exceed the rate of tax provided in DTAA.
|
Tax deduction at source - Rate of TDS - Case covered by section 206AA - Whether section 206AA overrides DTAA
Assessee had not deducted tax at source on a payment towards design charges and on payment of exhibition fees, both payments had been made to the non-residents and therefore DCIT passed an order under section 201(1) and 201(1A) holding assessee to be an assessee-in-default for non-deduction of tax at source. The rate of tax was also applied by the DCIT @ 21.115% in terms of section 206AA of the Act at a higher rate because of the provisions of section 206AA of the Act. The plea of the revenue was that section 206AA starts with a non-obstante clause and therefore it overrides all other provisions of the Act including 90(2), 115A and 139A. The plea of the assessee was that DTAA was supreme Held: Where deductee, i.e., overseas resident business concern conducts its operation from a territory, whose Government has entered into a DTAA with India, the rate of taxation would be as dictated by the provisions of the treaty.
Followed:Danisco India Private Ltd. v. Union of India & Ors. [W.P.(C) 5908/2015 Judgment/Order dt. 5-2-2018] : 2018 TaxPub(DT) 0848 (Del-HC) M/s. Nagarjuna Fertilizers & Chemicals Ltd. v. Asstt. CIT & Vice-Versa (2017) 78 taxmann.com 264 (Hyd) (SB) : 2017 TaxPub(DT) 0706 (Hyd-Trib)
REFERRED :
FAVOUR : In assessee's favour
A.Y. : 2011-12
IN THE ITAT, BANGALORE BENCH
 SUBSCRIBE FOR FULL CONTENT
OR Try Reload the Page |