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The HC upheld the Tribunal's decision favoring the assessee regarding TDS deduction rates under section 206AA. The assessee deducted TDS on payments to non-residents for royalty and technical services at rates prescribed in respective DTAAs, which were lower than the 20% rate under section 206AA. The revenue authorities sought to invoke section 206AA to demand higher TDS rates. However, the HC held that section 90(2) grants precedence to DTAA provisions when more beneficial to the assessee. Following precedents in Wipro Ltd. and Danisco India cases, the court confirmed that DTAA-prescribed maximum rates override domestic provisions. The Tribunal correctly deleted the tax demand representing the difference between the 20% statutory rate and actual DTAA rates applied by the assessee.
The HC upheld the Tribunal's decision favoring the assessee regarding TDS deduction rates under section 206AA. The assessee deducted TDS on payments to non-residents for royalty and technical services at rates prescribed in respective DTAAs, which were lower than the 20% rate under section 206AA. The revenue authorities sought to invoke section 206AA to demand higher TDS rates. However, the HC held that section 90(2) grants precedence to DTAA provisions when more beneficial to the assessee. Following precedents in Wipro Ltd. and Danisco India cases, the court confirmed that DTAA-prescribed maximum rates override domestic provisions. The Tribunal correctly deleted the tax demand representing the difference between the 20% statutory rate and actual DTAA rates applied by the assessee.
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