9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (4) TMI 480 - AT - Income TaxDemand of Short deduction of TDS through rectification order u/s 154 - TDS done as per the DTAA - whether DTAA will prevail over the provisions of sec.206AA? - debatable issue or not? - HELD THAT - Special Bench of the ITAT, Hyderabad in the case of Nagarjuna Fertilizers and Chemicals Ltd. vs ACIT 2017 (3) TMI 81 - ITAT HYDERABAD has held that DTAA will prevail over the provisions of sec.206AA of the Act. Therefore, the TDS done as per the DTAA is correct. Similar view has been taken in the case of Danisco India (P)Ltd.vs Union of India 2018 (2) TMI 1289 - DELHI HIGH COURT It was the ACIT-CPC-TDS who passed the order u/s.154 of the Act and therefore if the CIT(A) is of the view that the issue was debatable then the order u/s.154 of the Act should have been cancelled by him. He dismissed the appeals of the Assessee without realizing that the order u/s.154 of the Act was passed by the ACIT-CPC-TDS and not on any application filed by the Assessee. Again the question of limitation will also go against the revenue and not against the Assessee because it was the revenue i.e., the ACIT-CPC-TDS, who passed the order u/s.154 of the Act. The law as interpreted by the judicial forums by the Hon ble Delhi High Court on 5.2.2018 prior to the order u/s.154 of the Act passed by the ACIT-CPC-TDS supports the plea of the Assessee. In the given and facts and circumstances of the case and the legal position on the issue, we are of the view that the orders u/s.154 of the Act raising demand for short deduction of tax at source and interest thereon cannot be sustained and the same is directed to be cancelled. The appeals of the Assessee are accordingly allowed.
Issues:
1. Dispute regarding demand for short deduction of tax in TDS returns for various quarters. 2. Applicability of Sec.206AA of the Income Tax Act, 1961 over DTAA provisions. 3. Validity of orders passed by ACIT, CPC-TDS under Sec.154 of the Act. 4. Interpretation of whether DTAA prevails over Sec.206AA of the Act. Issue 1: Dispute regarding demand for short deduction of tax in TDS returns for various quarters. The appeals were filed against orders of CIT(A)-10, Bangalore related to demand for short deduction of tax in TDS returns for different quarters of assessment years 2011-12, 2012-13, and 2013-14. The Assessee failed to mention PAN of non-resident payees in TDS returns, leading to application of a higher TDS rate of 20% under Sec.206AA of the Act. ACIT, CPC-TDS raised demands for short deduction based on this discrepancy. Issue 2: Applicability of Sec.206AA of the Income Tax Act, 1961 over DTAA provisions. The Assessee contended that the higher TDS rate under Sec.206AA was not valid against DTAA provisions, which should prevail as per Sec.90(2) of the Act in case of a conflict. CIT(A) held this issue as debatable and dismissed the appeals, citing limitation under Sec.154(7) of the Act. However, the ITAT referred to precedents where DTAA was upheld over Sec.206AA, supporting the Assessee's plea. Issue 3: Validity of orders passed by ACIT, CPC-TDS under Sec.154 of the Act. ACIT, CPC-TDS passed orders under Sec.154 applying higher TDS rates due to non-resident payments. The Assessee challenged these orders, arguing that DTAA provisions should prevail. CIT(A) dismissed the appeals based on the debatable nature of the issue and limitation under Sec.154(7) of the Act. Issue 4: Interpretation of whether DTAA prevails over Sec.206AA of the Act. The ITAT analyzed the legal position and held that DTAA prevails over Sec.206AA, citing precedents like the Special Bench of the ITAT, Hyderabad, and the Delhi High Court. The orders passed by ACIT, CPC-TDS were found to be unsustainable, and the appeals of the Assessee were allowed, directing the cancellation of demands for short deduction of tax at source and interest thereon. In conclusion, the ITAT allowed all appeals, emphasizing that DTAA provisions prevail over Sec.206AA of the Act. The orders passed by ACIT, CPC-TDS were deemed invalid, and demands for short deduction of tax at source were directed to be canceled based on the legal interpretation provided by the judicial forums.
|
