TaxTMI 
TaxTMI 
2020 (3) TMI 1198
X X X X Extracts X X X X
X X X X Extracts X X X X
....ears 2014-15 and 2015-16. 2. Facts involved in these two appeals, insofar as the issue to be adjudicated are concerned, are identical and, therefore, we deem it just and convenient to dispose of these two appeals by way of common order. 3. Brief facts of the case are that M/s computer sciences Corporation India (P) Ltd. is a company engaged in providing software development services and outsourcing services and has availed management services, which are in the nature of Fee for Technical Services (FTS), from computer sciences Inc USA and made certain payments for such services, by deducting TDS at the rate of 20% on such payments. 4. Learned Assessing Officer observed that as per the provisions of section 206AA of the Income Tax Act, 196....
X X X X Extracts X X X X
X X X X Extracts X X X X
....) are concerned , but as per Article 12 of the India-USA DTAA the prescribed rate was 15% for such payments and, therefore, the tax could have been deducted at the rate of 15% being the lower one. It was further observed that in case there was no PAN, higher rate of 20% should be levied as prescribed under clause (iii) of section 206AA (1) of the Act which becomes the maximum prescribed rate under section 206AA of the Act. Ld. CIT(A), however, held that surcharge and education cess should also been levied. 7. Aggrieved by the finding of the Ld. CIT(A) in respect of the rate of tax withholding at 20% and contending that it must be at 15% entitling the assessee to seek refund of the excess 5%, and the levy of surcharge and education cess, as....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... make the payees who are subject to tax in India to obtain a PAN and to streamline the process of processing of returns and granting of credit. 10. Per contra, it is the submission on behalf of the assessee that the issue involved in this matter has squarely been covered by the decision of the Hon'ble jurisdictional High Court in the case of Danisco India Private Limited vs. UOI (2018) 404 ITR 539 wherein it is held that section 206AA of the Act has to be read down to mean that where the overseas resident business concern conducts its operations 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 DTAA. 11. We have gone through the record in the light of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the rates prescribed in the respective DTAAs between India and the relevant country of the non-residents; and, such rate of tax being lower than the rate of 20% mandated by section 206AA of the Act. The CIT(A) has found that the provisions of section 90(2) come to the rescue of the assessee. 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. 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, havin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....se of the Revenue is that the tax deduction at source was required to be made at 20% in the absence of furnishing of PAN by the recipient non-residents, having regard to section 206AA of the Act. In our considered opinion, it would be quite incorrect to say that though the charging section 4 of the Act and section 5 of the Act dealing with ascertainment of total income are subordinate to the principle enshrined in section 90(2) of the Act but the provisions of Chapter XVII-B governing tax deduction at source are not subordinate to section 90(2) of the Act. Notably, section 206AA of the Act which is the centre of controversy before us is not a charging section but is a part of a procedural provisions dealing with collection and deduction of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 conseque....