PAN non-furnishing triggers higher TDS under section 206AA, overriding the general PAN exemption for taxable non-resident payments.

Section 206AA applies a mandatory higher TDS rate where a deductee fails to furnish a Permanent Account Number on taxable payments, and its non obstante clause overrides the general PAN exemption under section 139A and the corresponding rule. On payments for technical services rendered in India by non-resident companies, tax deduction at source was therefore required at 20% in the absence of PAN. The assessee's liability to deduct at the higher rate was upheld, and the finding that it was an assessee in default remained undisturbed.

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Issues: Whether, in the absence of a Permanent Account Number furnished by non-resident recipients, tax was required to be deducted at 20% under section 206AA notwithstanding the exemption from obtaining a Permanent Account Number under section 139A and the corresponding rule.

Analysis: The payment made was for technical services rendered in India by non-resident companies and was taxable in India, so tax deduction at source was attracted. Section 206AA begins with a non obstante clause and expressly requires the deductee to furnish a Permanent Account Number to the deductor, failing which tax must be deducted at the higher prescribed rate, including 20%. The Tribunal held that this special command overrides section 139A and the rule relied on by the assessee, and that the absence of a Permanent Account Number therefore justified deduction at 20%.

Conclusion: The assessee was correctly held liable to deduct tax at 20% in the absence of a Permanent Account Number, and the finding that it was an assessee in default was upheld.

Ratio Decidendi: Section 206AA overrides the general provisions relating to Permanent Account Number and mandates deduction at 20% where the deductee fails to furnish a Permanent Account Number on taxable payments.

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