TaxTMI 
TaxTMI 
2026 (8) TMI 1739
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....84 of 2018. - -<br>Income Tax<br>HONOURABLE MR. JUSTICE BHARGAV D. KARIA AND HONOURABLE MR. JUSTICE PRANAV TRIVEDI Appearance: For the Appellant(s) No. 1: Ms Maithili D Mehta (3206). For the Opponent(s) No. 1: Mr B S Soparkar (6851). For the Opponent(s) No. 1: Mrs Swati Soparkar (870). ORAL ORDER (PER : HONOURABLE MR. JUSTICE PRANAV TRIVEDI) 1. Heard Senior Standing Counsel Ms. Maithili Mehta for the appellant and learned advocate Mr. Bandish Soparkar for the respondent in respective Tax Appeals. 2. These appeals are filed under section 260A of the Income Tax Act, 1961 (For short "the Act") by the appellant-revenue challenging the orders passed by the Income Tax Appellate Tribunal (for short 'the Tribunal'). 3. Th....
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....020/- for short deduction of TDS and interest of Rs.22,008/-. 6. Being aggrieved by the order passed by the Assessing Officer, the respondent-assessee filed an appeal before the Commissioner of Income Tax (Appeals)-8 Ahmedabad [for short 'the CIT(A)']. The appellate authority decided the appeal in favour of the assessee and directed the Assessing Officer to delete the demand raised on the basis of application of Section 206AA of the Act and further directed the Assessing Officer to delete the interest which was consequential to the demand of short deduction. 7. Being aggrieved by the decision passed by the CIT(A), the revenue filed an appeal before the Income Tax Appellate Tribunal (for short 'the Tribunal'). The Tribunal dismissed th....
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....a recovery of an additional 10%, in the event, the non-resident payee, did not possess PAN. 7. In this context, the ITAT in Serum Institute of India (Supra) discussed this very issue in some detail and stated, as follows: "............The case of the Revenue is that in the absence of furnishing of PAN, assessee was under an obligation to deduct tax @ 20% following the provisions of section 206AA of the Act. However, assessee had deducted the tax at source at 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 ....
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....der the Act are also subordinate to the principle enshrined in section 90(2) as held by the Hon'ble Supreme Court in the case of Azadi Bachao Andolan and Others (supra). Thus, in so far as the applicability of the scope/rate of taxation with respect to the impugned payments make to the non-residents is concerned, no fault can be found with the rate of taxation invoked by the assessee based on the DTAAs, which prescribed for a beneficial rate of taxation. However, the case 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 th....
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....s that DTAAs override domestic law in cases where the 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, in our view, where the tax has been deducted on the strength of the beneficial provisions of section DTAAs, 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) ....
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....d in the present appeal are squarely covered by the judgment of this Court in Danisco India (P.) Ltd. vs. Union of India [2018] 90 taxmann.com 295 (Delhi)...." 8. The Hon'ble Apex Court has dismissed the SLP arising out of order passed by Delhi High Court in case of Commissioner of Income Tax (International Taxation) v. Air India Ltd reported in 456 ITR 139 (SC). 9. The Hon'ble Bombay High Court in case of the Commissioner of Income Tax (International Taxation) Pune v. Serum Institute of India Ltd (Order dated December 17, 2018 passed in Income Tax Appeal No. 548 of 2016 and allied matters) has followed the decision of Delhi High Court in case of Danisco India (P) Ltd. (supra) to hold that the assessee was not liable to de....