9911796707
TMI Blog2017 (5) TMI 1309X X X X Extracts X X X X X X X X Extracts X X X X ..... ries. Hon'ble Supreme Court in the case of CIT Vs. P.V.A.L. Kulandagan Chettiar (Dead) Through LRs [2004 (5) TMI 8 - SUPREME Court] where it is clearly reiterated that the provisions of DTAA prevail over the provisions of I.T. Act, 1961. - Decided against revenue - ITA No. 843-844/Hyd/14 - - - Dated:- 26-5-2017 - Shri D. Manmohan, Vice President And Shri B. Ramakotaiah, Accountant Member For Revenue : Smt U. Minichandran, DR For Assessee : Shri C.P. Ramaswami, AR ORDER Per B. Ramakotaiah, A. M. These two appeals are by Revenue against the common order of the Commissioner of Income Tax (Appeals)-V, Hyderabad, dated 07-11-2013 for the AYs. 2011-12 2012-13 on the issue of short deduction of TDS, invoking the provisions of Section 206AA of the Income Tax Act [Act]. 2. Briefly stated facts are that assessee had paid certain amounts to non-residents and TDS has been made u/s. 195 of the Act at 10% of the amount invoking the provisions of Double Taxation Avoidance Agreement [DTAA] with respect to countries to which non-residents belong. Assessee filed the returns of TDS in form No. 27Q for all the four quarters in respective assessment years. AO applied 20% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade available by the appellant in the revised returns, the short deduction was reduced in the revised processing. Now coming to the rest of the claim of the appellant, it is settled law that the provisions of DTAA prevail over the provisions of the Income Tax Act, 1961. In the case on hand, the appellant deducted tax at source at 10% of the payments made u/s 195 to the non residents relying on DTAAs prevailing with the countries in which the deductees are residing. While processing these returns, as the PAN of such deductees was not mentioned in the returns, higher rate of tax, i.e., 20% was applied, as per provisions of section 206AA. At the same time, there cannot be any doubt over the claim of the appellant that provisions of DTAA override the provisions of Income Tax Act, 1961. However, it appears that there is no channel available to the appellant to put this stand before the Assessing Officer while processing the TDS return. As seen from the list of deductees and the PANs now made available for both the assessment years, the deductees are mostly from USA, China, Korea, Finland and Italy. DTAAs are available with all these five countries. 6.4 In view of the above, the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be considered only if such PANs were allotted/available at the point of time when deduction was required to be made as per Sec.195. (7) Any other ground that may be urged at the time of hearing . Ground Nos. 1 7 are general in nature. 6. Ld.DR reiterated the contentions as raised in the grounds of appeal, whereas Ld. Counsel relied on the Special Bench decision in the case of Nagarjuna Fertilizers and Chemicals Ltd., Vs. ACIT [55 ITR (Trib) 1], Hyderabad (Special Bench) for the proposition that the provisions of DTAA override the provisions of TDS. 7. We have considered the rival contentions and perused the orders on record. Admittedly, Ld.CIT(A) followed the principles laid down by the Hon'ble Supreme Court in the case of CIT Vs. P.V.A.L. Kulandagan Chettiar (Dead) Through LRs [267 ITR 654] (SC) where it is clearly reiterated that the provisions of DTAA prevail over the provisions of I.T. Act, 1961. Even though the Revenue in its grounds relied on the decision of the Co-ordinate Bench at ITAT, Bangalore in the case of Bosch Ltd., Vs. ITO [141 ITD 38], there is a contrary decision of ITAT, Pune Bench in the case of DDIT Vs. Serum Institute of India Ltd., [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l order, a reference was made by the Division Bench to the President to constitute a Special Bench to decide the issue and resolve the controversy. Held, allowing the appeal, (i) that deduction of tax under section 195 from the payments made to non-residents in the nature of fees for technical services was made by the assessee at the rate or rates of income-tax specified in the relevant Agreement, which were adopted as rates in force for the purpose deduction of tax under section 195 in view of the specific provisions contained in sub-section (37A) of section 2. The Department's contention that relevant Agreements do not provide for deduction of tax at source at a rate lower than the rate applied by the Assessing Officer by invoking the provisions of section 206AA and that there was no question of abrogation of the relevant provisions of the Agreement in this regard were not tenable. Equally untenable was its contention that the role of the assessee as a payer of the sum was limited to deducting tax at source according to law and he had nothing to do with the determination of tax liability eventually in the hands of the payee, which was within the complete domain of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fect by virtue of the non obstante clause contained in section 195, a separate provision has been inserted simultaneously in the form of sub-section (2A) in section 90 providing specifically that notwithstanding anything contained in sub-section (2), the provisions of Chapter X-A shall apply to the assessee even if such provisions are not beneficial to him. However no such provision is made separately and specifically in section 90 to give overriding effect to section 206AA over section 90(2) which clearly shows that the intention of the Legislature is not to give overriding effect to section 206AA over the provisions of the relevant Agreements which are beneficial to the assessee . 7.1. In view of the judgment of the Special Bench of the ITAT, we do not see any reason to interfere with the order of the CIT(A) which is in tune with the principles laid down therein. 8. It is also to be noted that when assessee has furnished the PAN numbers of some of the deductees, AO has accepted them as can be seen from the order of the CIT(A). In view of the above fact, the grounds raised in Ground No. 6 does not have any validity and accordingly, the ground is treated as infructuous. All th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
