DTAA Prevails Over S.206AA Of Income Tax Act For TDS On Payments To Non-Residents Without PAN: Gujarat High Court
The Gujarat Excessive Court docket said that DTAA (Double Taxation Avoidance Settlement) prevails over Part 206AA of Revenue Tax Act for TDS on funds to non-residents with out PAN.
Justices Bhargav D. Karia and Pranav Trivedi was addressing the appeals pertains to alleged brief deduction of TDS and elevating demand by invoking provisions of part 206AA of the Revenue Tax Act, 1961.
Part 206AA of Revenue Tax Act, 1961 requires each taxpayer who receives taxable revenue to furnish their PAN to the payer of such revenue. This is applicable to each resident and non-resident recipients.
In this case, the assessee/respondent has deducted TDS on the charge talked about in DTAA treaty between India and respective international locations or as per the speed talked about within the Revenue Tax Act,1961 whichever is extra helpful to the assessee and even within the instances the place recipient of the funds who’re non-resident events and didn’t furnish PAN.
The Income/appellant subsequently by invoking part 206AA of the Act held the assessee answerable for obligation to deduct TDS at greater charge on cost made to non-residents, who didn’t have PAN, on the charge of 20%.
CIT(Appeals) held that the assessee is just not liable to deduct the tax at the next charge in view of the provisions of part 90(2) of the Revenue Tax Act.
Being aggrieved, the Income most well-liked appeals earlier than the Tribunal. The Tribunal has upheld the choice of CIT(Appeals) by dismissing the appeals filed by the Income.
The bench referred to the case of Commissioner of Revenue Tax (Worldwide Taxation) Pune v. Serum Institute of India Ltd. (Revenue Tax Enchantment No. 548 of 2016) the place it was held that the assessee was not liable to deduct tax on the charge of 20% as per the provisions of part 206AA of the Revenue Tax Act in view of DTAA learn with part 90(2) of the Revenue Tax Act.
The bench said that “the assessee has deducted the tax at supply on cost made to non-residents on account of royalty and/or charges for technical providers on the charges prescribed in respective DTAAs between India and respective international locations of non-residents and such charge of tax being decrease than charge of 20% as offered underneath part 206AA of the Revenue Tax Act, CIT (Appeals) and the Tribunal have rightly arrived at concurrent findings to the impact that as per part 90(2) of the Act, the provisions of DTAA would override the provisions of the Home Act the place the provisions of the DTAA are extra helpful to the assessee.”
The Tribunal subsequently, has rightly affirmed the conclusion arrived at by CIT(Appeals) in deleting the tax demand relatable to distinction between 20% and the precise tax charge on which tax was deducted by the assessee when it comes to the related DTAAS, added the bench.
In view of the above, the bench dismissed the attraction.
Case Title: Commissioner of Revenue Tax (Worldwide Taxation and switch Pricing v. M/s Adani Wilmar Ltd.
Case Quantity: R/TAX APPEAL NO. 514 of 2024
Counsel for Enchantment/Division: M/s Maithili D Mehta
Counsel for Respondent/Assessee: B S Soparkar and Swati Soparkar
