TaxTMI 
TaxTMI 
2020 (10) TMI 1078
X X X X Extracts X X X X
X X X X Extracts X X X X
.... which are listed out in the impugned order of the CIT(A) to non-residents after grossing up the invoice amount and deducting tax at source thereon at the rates in force as per Sec. 195 of the Income Tax Act, 1961 (Act). It was the plea of the Assessee that the payments made to non-resident were not chargeable to tax and therefore the Assessee was not under any obligation to deduct tax at source on the aforesaid payments. This plea was rejected by the revenue authorities in the application filed by the Assessee u/s. 248 of the Act pleading that the Assessee was not under any obligation to deduct tax at source on the aforesaid payments made to non-residents. The Assessee also made a claim in the alternative and without prejudice to the main ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... rates mentioned 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% 3. The AO rejected the plea of the Assessee that it is only the rates of taxes mentioned in the DTAA that should be adopted for the purpose of grossing up and also for determining the tax liability. According to the AO, the provisions of the Act, especially non-obstante clause in Sec. 206AA of the Act have an overriding effect on the DTAA. 4. On appeal by the Assessee, the CIT(A) accepted the plea of the Assessee that the DTAA will override the provisions of the Act including Sec. 206AA of the Act and that the rate of tax to be applied for grossing up sho....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at section 206AA starts with a non-obstante clause and therefore it overrides all other provisions of the Act including 90(2), 115A and 139A. The plea of the Assessee was that DTAA was supreme and in this regard 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 C....