TaxTMI 
TaxTMI 
2020 (6) TMI 669
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.... are as follows:- "1. The learned Commissioner of Income Tax (Appeals) has erred in law and facts of the case in allowing the appeal of the assessee on the issue of applicability of section 206AA of the Income-tax Act, 1961, in respect of payments made to non-resident entities. 2. The learned Commissioner of Income Tax (Appeals) erred in law as well as on facts in holding that there is no scope for deduction of tax at the rate of 30%, as provided under the provisions of Section 206AA when the benefit of DTAA is available, despite the overriding effect of Section 206AA of the Income-tax Act, 1961 due to the presence of a non-obstante clause in the Section and a plain reading of the section [indicates that it overrides other....
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....he assessee's case. 7. For these and such other grounds that 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." 3. The assessee is a company engaged in the business of manufacturing metal cutting grinding machines, spares, accessories and related services. The DCIT, Intl. Taxation, Circle 1(1), Bangalore [DCIT] received information from the ACIT, TDS Circle 1(1), Bangalore that as per the Tax Audit Report in Form 3CD, it has been mentioned that the assessee had not deducted tax at source on a payment of Rs. 2,63,08,939 towards design charges and Rs. 29,11,816 on payment of exhibition fees, both payments had been made to the non-residents (Tax residents....
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....ioned below: * At the rate specified in the relevant provision of the Act; * At the rate or rates in force, i.e., the rate prescribed in the Finance Act.; * At the rate of 20% 4. In an appeal against the aforesaid order, the assessee contended before the CIT(Appeals) that the rate of tax at which TDS should be made by the assessee is 10% in accordance with the Treaty for Avoidance of Double Taxation between India and Germany (DTAA) and not at the higher rate of tax @ 20% by invoking the provisions of section 206AA of the Act. This submission was accepted by the CIT(A) and on the basis of the decision of the Pune Bench of the ITAT in the case of Serum Institute of India Ltd. in ITA No.792/PN/2013. Aggrieved b....
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....rd reliance was placed on the Hon'ble Supreme Court decision in the case of Azadi Bachao Andolan (2003) 263 ITR 706 (SC), whereby it was held that DTAA, even if inconsistent, will prevail over the Act. Reliance was also placed on the decisions of the Hon'ble Andhra Pradesh High Court in the case of Sanofi Pasteur (2013) 354 ITR 316 (AP) wherein it was observed that DTAA being a sovereign matter, the machinery provisions cannot override or control that. Reliance was also placed on the decision of the Hon'ble Karnataka High Court in the case of Kaushallaya Bai and others (2012) 346 ITR 156 (Kar) wherein it has held that the provisions of section 206AA are to be read down. 7. The Special Bench held that DTAA overrides the Act, even if it is....