TaxTMI 
TaxTMI 
TaxTMI 
2021 (3) TMI 1001
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....ydro Generating Sets, Switch Board Penal, HT Circuit Breakers, Relays and host and others Electrical and Engineering items particularly connected with hydraulic, irrigation, power and heavy engineering industries. The company has a big name in the power sector and irrigation department. The company has been in existence for the past more than 70 years and the Company enjoys sound reputation in the engineering field in the country and abroad. 3. During the assessment proceeding while replying to the show cause issued to the appellant as to why TDS @20% had not been deducted from the said party, the assessee submitted inter alia that the TDS deducted @ 10%, in terms of the rate prescribed for the services as per Double Taxation Avoidance Agreement (DTAA) entered into by the Government of India with that particular country. However, such plea of the assessee was not found acceptable and ultimately a total addition of Rs. 1,29,61,300/- was made upon making the assessee liable to pay TDS @ 20% on the respective payments made to the said party by the Ld. DCIT (IT), Vadodara which, in turn, was affirmed by the Ld. CIT(A). Hence, the instant appeal before us. 4. At the time of hearing of....
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....scribes such rate of tax to be deducted @ 10%. 7. We have considered the Section 206AA of the Income Tax Act which reads as follows:- "(1) Notwithstanding anything contained in any other provisions of this Act, any person entitled to receive any sum or income or amount, on which tax is deductible under Chapter XVIIB (hereafter referred to as deductee) shall furnish his Permanent Account Number to the person responsible for deducting such tax (hereafter referred to as deductor), failing which tax shall be deducted at the higher of the following rates, namely:- (i) at the rate specified in the relevant provision of this Act; or (ii) at the rate or rates in force; or (iii) at the rate of twenty per cent. (2) No declaration under sub-section (1) or sub-section (1A) or sub-section (1C) of section 197A shall be valid unless the person furnishes his Permanent Account Number in such declaration. (3) In case any declaration becomes invalid under sub-section (2), the deductor shall deduct the tax at source in accordance with the provisions of sub-section (1). (4) No certificate under section 197 shall be granted unless the application made under that section contains the....
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....s tax identification number in the country or the specified territory of residence and in case there is no such number, then, a unique number on the basis of which the person is identified by the Government of the country or the specified territory of which such person claims to be a resident." 10. However, practically, the provision of Section 90(2) has come to the rescue of the assessee. It provides that the provision of the DTAAs would override the provisions of the domestic Act in case where the provisions of DTAAs are more beneficial to the assessee. Needless to mention that, the issue 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 Czech Republic, having regard to the provision of Section 90(2) of the Act to be settle at the beneficial rate of taxation @ 10% in terms of Article 12 of the Agreement for Avoidance of Double Taxation and provision of fiscal evasion with Czech Republic in the present facts and circumstances of the case. 11. In this respect further carefully considered the judgment passed by the Hon'ble Apex Court in the matter of Union of India & Anr. vs.....
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....appeal before the CIT(A) but without any success. Learned CIT(A), relying upon the press release dated 20th January 2010 issued by the Central Board of Direct Taxes, held that, in terms of the provisions of Section 206AA, in a case in which the recipient foreign entity has not obtained PAN from the Indian tax authorities, the tax will be deducted at a higher rate of 20%. The assessee is not satisfied and is in further appeal before us. [3] We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. [4] It is only elementary that, under the scheme of the Income Tax Act 1961- as set out under section 90(2) of the Act, the provisions of the applicable tax treaties override the provisions of the Income Tax Act 1961- except when the provisions of the Act are more beneficial to the assessee. The provisions of the applicable tax treaty, in the present case, prescribe the tax rate @ 10%. This rate of 10% is applicable on the related income whether or not the assessee has obtained the permanent account number. In effect, therefore, even when a foreign entity does not obtain PAN in India, the a....