Uniphos Envirotronic Pvt. Ltd., Valsad V. The Dy.CIT, CPC- TDS, Gaziabad

ITA 1975/AHD/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0412 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 31-08-2016
• Assessment Year: 2014-2015
• Appeal Filed On: 03-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rectification of order
• Section: 206AA; 154

Judgement Text

I.T.A. NO.197 5 /AHD/201 5 ASSESSMENT YEAR : 2014 - 15 PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD I BENCH, AHMEDABAD [CORAM : PRAMOD KUMAR AM AND S S GODARA JM ] I.T.A. NO . 197 5 /AHD/2015 ASSESSMENT YEAR: 2014 - 15 UNIPHOS ENVIROTRONIC PRIVATE LIMITED . .. ....... APPELLANT GIDC ESTATE, VAPI , VALSAD. [PAN: AABCU 0216 A ] VS DY. COMMISSIONER OF INCOME TAX ......RESPONDENT CPC - TDS - GHAZIABAD. APPEARANCES BY S.N. SOPARKAR AND PARIN SHAH, FOR THE APPELLANT JAMES KURIAN FOR THE RESPONDENT ORDER RESERVED ON : 31/08/ 2016 ORDER PRONOUNC ED ON : 30 /09/ 2016 O R D E R PER PRAMOD KUMAR, AM: [1] BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 28.05.2015 PASSED BY THE LEARNED CIT(A) IN THE MATTER OF RECTIFICATION OF MISTAKE UNDER S ECTION 154 R.W.S 200A OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2014 - 15, ON THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN UPHOLDING THE ACTION OF THE DCIT, CPC, IDS PASSED UNDER SEC TION 200A OF THE ACT BY RELYING ON TH E PRESS RELEASE NO. 402/92/2006 - MC (04 OF 2010) DATED 20.01.2010 ISSUED BY CBDT REQUIRING THAT ALL DEDUCTORS WHO ARE LIABLE TO DEDUCT TAX ARE REQUIRED TO DEDUCT TAX AT A HIGHER RATE IN ALL TRANSACTIONS NOT HAVING PAN OF THE DEDUCTEE ON OR AFTER 1 ST APRIL 2010. 2. IN DOING SO, THE HON'BLE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN THE FOLLOWING RESPECTS: I.T.A. NO.197 5 /AHD/201 5 ASSESSMENT YEAR : 2014 - 15 PAGE 2 OF 3 2.1 IN NOT APPRECIATING THE FACT THAT THE APPELLANT GROSSED UP THE CONSIDERATION PAYABLE TO MSA AUER GMBH ('MSA ') A GERMAN LIMITED LIABILITY COMPANY TOWARDS PURCHASE OF TECHNICAL KNOWHOW AND DEDUCTED TAX @ 10% AS FEE FOR TECHNICAL SERVICES UNDER ARTICLE 12 OF THE TAX TREATY, FOLLOWING THE BENEFICIAL PROVISIONS CONTAINED IN SECTION 90(2) OF THE ACT . 2.2 IN NOT APP RECIATING THE FACT THAT SECTION 206AA OF THE ACT IS NOT A CHARGING SECTION AND PROVISIONS OF CHAPTER XVII - B GOVERNING TDS ARE NOT SUBORDINATE TO SECTION 90(2) OF THE ACT. [2] WHEN THIS APPEAL WAS CALLED OUT FOR H E ARING, LEARNED REPRESENTATIVES FAIRLY AGR EED THAT WHATEVER WE DECIDE IN THE CASE OF UNIPHOS ENVIROTRONIC PRIVATE LIMITED VS. DCIT CPC - TD S (ITA NO.1974/AHD/2015) WILL APPLY MUTATIS MUTANDIS IN THIS CASE AS WELL. [3] VID E OUR ORDER OF EVEN DATE, WE HAVE UPHELD THE PLEA OF THE ASSESS E E IN THE SAID C A SE AND REASONED A S FOLLOWS : - [3] WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. [4] IT IS ONLY ELEMENTARY THAT, UNDER THE SCHEME OF THE INCOME T AX ACT 1961 - AS SET OUT UNDER SECTION 90(2) OF THE ACT, THE PROVISIONS OF THE APPLICABLE TAX TREATIES OVERRIDE THE PROVISIONS OF THE INCOME TAX ACT 1961 - EXCEPT WHEN THE PROVISIONS OF THE ACT ARE MORE BENEFICIAL TO THE ASSESSEE. THE PROVISIONS OF THE APPLI CABLE TAX TREATY, IN THE PRESENT CASE, PRESCRIBE THE TAX RATE @ 10%. THIS RATE OF 10% IS APPLICABLE ON THE RELATED INCOME WHETHER OR NOT THE ASSESSEE HAS OBTAINED THE PERMANENT ACCOUNT NUMBER. IN EFFECT, THEREFORE, EVEN WHEN A FOREIGN ENTITY DOES NOT OBTA IN PAN IN INDIA, THE APPLICABLE TAX RATE IS 10% IN THIS CASE. SECTION 206AA, WHICH PROVIDES A HIGHER TAX BURDEN - I.E. TAXABILITY @ 20% IN THE EVENT OF FOREIGN ENTITY NOT OBTAINING THE PERMANENT ACCOUNT NUMBER IN INDIA, THEREFORE, CANNOT BE PRESSED INTO SER VICE, AS HAS BEEN DONE IN THE COURSE OF PROCESSING OF RETURN UNDER SECTION 200A. TO THAT EXTENT, SHORT DEDUCTION OF TAX AT SOURCE DEMAND, RAISED IN THE COURSE OF PROCESSING OF TDS RETURN UNDER SECTION 200A, IS UNSUSTAINABLE IN LAW. WE QUASH THIS SHORT DED UCTION OF TAX AT SOURCE DEMAND. THE GRIEVANCE OF THE ASSESSEE IS INDEED JUSTIFIED, MERITS ACCEPTANCE AND IS HEREBY UPHELD. I.T.A. NO.197 5 /AHD/201 5 ASSESSMENT YEAR : 2014 - 15 PAGE 3 OF 3 [4] WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY US IN THE ABOVE CASE. [ 5 ] IN THE RESULT, T HE APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT TODAY ON 30 TH DAY OF SEPTEMBER, 2016. SD/ - SD/ - S S GODARA PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD, THE 30 TH DAY OF SEPTEMBER, 2016 . COPIES TO : (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD