Section 206AA of the Act does not override the provision of Section 92 of the Income Tax Act

 

 

 

ITAT AHMEDABAD

JYOTI LIMITED VERSUS DCIT (INTERNATIONAL TAXATION) , VADODARA

I.T.A. No. 666/Ahd/2018

 

 

Short Overview: 

TDS @ 20% on the foreign remittance u/s 206AA

 Failure to furnish  Permanent Account Number (PAN) by the recipient non-residents, having regard to the Section 206AA

Provisions of DTAAs

ITAT observed as under:

 Considering entire aspect of the matter the provisions of Art 12 of DTAA entered into by and between two Sovereign States – India and Czech Republic, the Circular No. 333 dated 02.04.1982 issued by CBDT, the specific recommendation made by the Justice Easwar’s Committee, the ratio laid down in the judgment of Azadi Bachao Andolan [2003 (10) TMI 5 – SUPREME COURT], in our considered opinion the provision of Section 206AA of the Act cannot be invoked by the Revenue to insist the tax deduction @ 20% having regard to the overriding nature of the provision of Section 92 of the Act in the present facts and circumstances of the case.

In fact, Section 206AA of the Act does not override the provision of Section 92 of the Act and in that view of the matter in the case in hand the TDS has been deducted to the non-resident rightly applying the tax rate prescribed under the DTAAs and not as per Section 206AA of the Act, having regard to the more beneficial provision in the rate of tax made in the DTAA.

Hence, we find no justification in making the assessee liable to pay TDS @ 20% on the foreign remittance as held by the Revenue by the order impugned.

Such decision, in our considered opinion, is of no merit and thus, rejected.

The appeal preferred by the assessee is, therefore, allowed.