TaxTMI 
TaxTMI 
2019 (5) TMI 277
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....00/- equivalent to Rs. 6,87,60,000/- was paid to M/s. Tatra Sipox as part payment and the amount to be remitted was grossed up for the purpose of withholding tax at Rs. 8,08,94,122/- under section 195 of the Income Tax Act, 1961 (in short 'the Act') @ 15% thereof, amounting to Rs. 1,21,34,118/- was deducted in accordance with Article 13 of DTAA between India and the United Kingdom. The Assessing Officer (AO), on examination thereof sent an intimation under section 200A of the Act dated 28.03.2013 for not deducting tax at the higher rate as prescribed in section 206AA of the Act since the non-resident payee does not have Permanent Account Number (PAN). 2.2 Being aggrieved by the aforesaid order, the assessee carried the matter in appeal before the CIT(A)-13, Bangalore. The CIT(A) allowed the assessee's appeal vide the impugned order dated 23.02.2018, inter alia, following the decision of the Hon'ble Delhi High Court in the case of Danisco India (P) Ltd., reported in (2018) 404 ITR 539 (Delhi). Revenue's appeal in IT(IT)A No.1398/Bang/2018 (Assessment Year 2011-12) 3.1 Revenue, being aggrieved by the order of the CIT(A)-13, Bangalore, dated 23.02.2018, has preferred this app....
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....at may be urged at the time of hearing, it is prayed that the order of the AO be restored and that of the CIT(A) be cancelled. The learned DR for Revenue was heard in support of the grounds raised (supra) and he relied on the order of the AO in the matter and the judicial pronouncements cited in the grounds raised. 3.2 Per contra, the learned AR for the assessee contended that there was no error in the impugned order of the CIT(A). It is argued that there is no merit in the grounds raised by Revenue as the issue was covered in favour of the assessee by the decision of the Hon'ble Delhi High Court in the case of Danisco India (P) Ltd., Vs. UOI (2018) 404 ITR 539 (Delhi). 3.3.1 We have heard / considered the rival contentions / submissions and carefully perused the material on record; including the judicial pronouncements cited. The facts of the matter, as borne out from the record and narrated at para 2.1 of this order (supra) is that the assessee, in terms of its agreements, deducted tax @ 15% i.e., Rs. 1,21,34,118/- out of the grossed up amount for repatriation of Rs. 6,87,60,000/- to M/s. Tatra Sipox, UK in accordance to Article 13 of he India - UK, DTAA. The AO was of t....
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....icial to the assessee. There cannot be any doubt to the proposition that in case of non-residents, tax liability in India is liable to be determined in accordance with the provisions of the Act or the DTAA between India and the relevant country, whichever is more beneficial to the assessee, having regard to the provisions of section 90(2) of the Act. In this context, the CIT(A) has correctly observed that the Honble Supreme Court in the case of Azadi Bachao Andolan v. Union of India, [(2003) 263 ITR 706 SC] = [1"S-5-SC-2003-0] has upheld the proposition that the provisions made in the DTAAs will prevail over the general provisions contained in the Act to the extent they are beneficial to the assessee. In this context, it would be worthwhile to observe that the DTAAs entered into between India and the other relevant countries in the present context provide for scope of taxation and/or a rate of taxation which was different from the scope/rate prescribed under the Act. For the said reason, assessee deducted the tax at source having regard to the provisions of the respective DTAAs which provided for a beneficial rate of taxation. It would also be relevant to observe that even the char....
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....provisions of DTAAs are more beneficial to the assessee and the same also overrides the charging sections 4 and 5 of the Act which, in turn override the DTAAs provisions especially section 206AA of the Act which is the controversy before us. Therefore, it our view, where the tax has been deducted on the strength of the beneficial provisions of section DTAA the provisions of section 206AA of the Act cannot be invoked by the Assessing Officer to insist on the tax deduction @ 20%, having regard to the overriding nature of the provisions of section 90(2) of the Act. The CIT(A), in our view. correctly inferred that section 206AA of the Act does not override the provisions of section 90(2) of the Act and that in the impugned cases of payments made to non-residents, assessee correctly applied the rate of tax prescribed under the DTAAs and not as per section 206AA of the Act because the provisions of the DTAAs was more beneficial_ Thus, we hereby affirm the ultimate conclusion of the CIT(A) in deleting the tax demand relatable to difference between 20% and the actual tax rate on which tax was deducted by the assessee in terms of the relevant DTAAs. As a consequence, Revenue fails in its ap....