The DCIT (International Taxation)-1, Ahmedabad V. Sichuan Fortune Projects Management Ltd., Ahmedabad

ITA 210/AHD/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8596 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-04-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: misc
• Appeal Filed On: 25-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Keywords: Double taxation relief
• Section: 206AA

Judgement Text

, M MM MH HH H IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD EKUHK CKSJM BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER AND SHRI, MANISH BORAD, ACCOUNTANT MEMBER I.T.A. NOS.210 & 211/AHD/2017 ( !' ASSESSMENT YEARS:2014-15) THE DCIT(INTERNATIONAL TAXATION)-1, 205, 2 ND FLOOR, NAVJEEVAN TRUST BUILDING, B/H GUJARAT VIDYAPITH, ASHRAM ROAD, AHMEDABAD 380 014. VS. SICHUAN FORTUNE PROJECTS MANAGEMENT LTD., 302, MANGALYA APARTMENT, OPP. KRUPA PETROL PUMP, JUNA SHRDA MANDIR ROAD, ELLIS BRIDGE, AHMEDABAD 380 006 # $% PAN/GIR NO. : AHMS 14614 F ( #& / APPELLANT ) .. ( '#& RESPONDENT ) #&( APPELLANT BY : SHRI V. K. SINGH, D.R. '#&)( / RESPONDENT BY : SHRI IRA KAPOOR, A.R. * +),- / DATE OF HEARING 05 /0 4 /201 8 ./'!),- / DATE OF PRONOUNCEMENT 09 / 0 4 /201 8 0 O R D E R PER MAHAVIR PRASAD, JUDICIAL MEMBER : THESE TWO CAPTIONED APPEALS HAVE BEEN FILED AT TH E INSTANCE OF THE REVENUE AGAINST THE SEPARATE APPELLATE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-8, AHMEDABAD [CIT(A) IN SHORT] DATED 08/11/2016 ARISING IN THE ORDER PASSED UNDER S.154 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO A S 'THE ACT') DATED 09/04/2015 RELEVANT TO ASSESSMENT YEAR (AY) 2014-15 . ITA NOS. 210 & 211/AHD/2017 DCIT VS. SICHUAN FORTUNE PROJECTS MANAGEMENT LTD.. ASST.YEAR 2014-15 - 2 - 2. SINCE IN BOTH APPEALS ISSUES, GROUNDS AND ASSESS MENT YEAR ARE COMMON ONLY FIGURES ARE DIFFERENT. THEREFORE, FOR T HE SAKE OF CONVENIENCE, WE WOULD LIKE TO DISPOSE OF BOTH APPEA LS ALTOGETHER. 3. IN BOTH ITA NOS.210 & 211/AHD/2017 FOR THE ASST. YEAR 2014- 15, FOLLOWING GROUNDS HAVE TAKEN BY THE REVENUE: (1) THE ID. CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN COMING TO THE CONCLUSION THAT SEC.206AA OF INCOME T AX ACT DOES NOT OVERRIDE THE PROVISION OF SEC.90(2) OF THE ACT, DESPITE THE FACT THAT SEC.206AA STARTS WITH A NON-OBSTINATE CLAUSE ? (2) THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN IGNORING THE MEMORANDUM EXPLAINING THE PROVISIONS O F THE FINANCE (NO.2) BILL, 2009 WHICH CLEARLY STATES THAT THE SEC.206AA OF INCOME TAX ACT APPLIES TO NON-RESIDENT S AND ALSO PRESS RELEASE OF CBDT NO.402/92/2006-MC(04 OF 2010) DATED 20/1/2010 WHICH REITERATES THAT SEC.206AA OF INCOME TAX ACT WILL ALSO APPLY TO ALL NON-RESIDENTS IN RESPECT OF PAYMENTS/REMITTANCES LIABLE TO TDS WHERE PAN IS NOT PROVIDED TO THE DEDUCTOR ? (3) THE ID. CIT(A) HAS ERRED IN LAW AND ON FACT S IN RELYING UPON THE DECISIONS WHICH WERE RENDERED BEFORE THE INTRODUCTI ON OF SEC.206AA OF THE INCOME TAX ACT ? 4. THE BRIEF FACTS OF THE CASE ARE THAT THE RESPOND ENT-COMPANY RECEIVED INTIMATION U/S.154 OF THE ACT FROM CPC GHA ZIABAD FOR FORM 27Q FOR QUARTER 2 & 4 OF F.Y.2013-14. THE RESPONDEN T HAS MADE PAYMENTS TO SHANGHAI ELECTRIC GROUP CO. CHINA (SEC) , A NON RESIDENT U/S.194A. THE RESPONDENT HAS DEDUCTED TDS AT 10% BE ING THE RATE MENTIONED IN THE TREATY BETWEEN INDIA AND CHINA, TH E COUNTRY OF THE DEDUCTEE OR AS PER THE RATE MENTIONED IN THE ACT WH EREVER APPLICABLE. HOWEVER, IN THE AFOREMENTIONED TDS INTI MATION ORDER, DEFAULT TYPE WAS MENTIONED AS SHORT DEDUCTION OF TD S AND THE ITA NOS. 210 & 211/AHD/2017 DCIT VS. SICHUAN FORTUNE PROJECTS MANAGEMENT LTD.. ASST.YEAR 2014-15 - 3 - ASSESSING OFFICER HAS INVOKED SECTION 206AA OF THE ACT, WHEREIN HIGHER RATE OF TDS IS REQUIRED TO BE DEDUCTED IN CA SE OF NON- AVAILABILITY OF PAN. 5. IN THE INTIMATION THE DEMAND WAS RAISED IN BOTH QUARTERS FOR SHORT DEDUCTION OF TDS AND INTEREST ON SUCH SHORT D EDUCTION AS UNDER: DEFAULT TYPE AS PER INTIMATION A.Y. 2014 - 15(Q2) A.Y. 201 4 - 15(Q4) SHORT DEDUCTION OF TDS 42,25,007 77,55,042 INTEREST ON SHORT DEDUCTION 8,35,041 11,01,732 TOTAL 50,60,048 88,56,774 13. AGAINST THE SAID DEMAND RESPONDENT MADE AN APPE AL BEFORE THE LD. CIT(A) WHO DELETED THE DEMAND RAISED BY THE DEPARTMENT. 14. NOW DEPARTMENTS APPEAL IS BEFORE US. 15. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IM PUGNED ORDER. CO-ORDINATE BENCH IN ITA NOS.2244, 2245 & 22 46/AHD/2016, IN WHICH, SIMILAR CIRCUMSTANCES DISMISSED THE APPEA L OF THE DEPARTMENT. 16. IN OUR CONSIDERED VIEW, WHEN THE TAX HAS BEEN D EDUCTED ON THE STRENGTH OF THE BENEFICIAL PROVISION OF DTAA. THE P ROVISION OF SECTION 206AA OF THE ACT CANNOT BE INVOKED BY THE ASSESSING OFFICER TO INSIST ON TAX DEDUCTION AT THE RATE OF 20%, HAVING REGARD TO OVERRIDING NATURE OF THE PROVISION OF SECTION 90(2) OF THE ACT . COME TO THE RESCUE OF THE RESPONDENT. SECTION 90(2) PROVIDED TH AT PROVISION OF ITA NOS. 210 & 211/AHD/2017 DCIT VS. SICHUAN FORTUNE PROJECTS MANAGEMENT LTD.. ASST.YEAR 2014-15 - 4 - DTAA WOULD OVERRIDE THE PROVISION OF DOMESTIC ACT I N CASES WHERE THE PROVISION OF DTAA IS MORE BENEFICIAL TO THE RES PONDENT. 17. IN OUR CONSIDERED OPINION, LD. CIT(A) HAS PASSE D DETAILED AND REASONED ORDER QUOTING JUDICIAL PRECEDENT IN THIS R EGARD. THEREFORE, WE DECLINE TO INTERFERE IN THE ORDER PASSED BY THE LD. CIT(A). 18. IN THE RESULT, BOTH THE APPEALS BY THE DEPARTME NT ARE DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 09/04/2018 SD/- SD/- EKUHK CKSJM EKUHK CKSJM EKUHK CKSJM EKUHK CKSJM EGKOHJ IZLKN EGKOHJ IZLKN EGKOHJ IZLKN EGKOHJ IZLKN YS[KK LNL; YS[KK LNL; YS[KK LNL; YS[KK LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; ( MANISH BORAD ) (M AHAVIR PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 09/04/2018 PRITI YADAV, SR. PS ! ' COPY OF THE ORDER FORWARDED TO : 1. #& / THE APPELLANT 2. '#& / THE RESPONDENT. 3. 12 , * 3, / CONCERNED CIT 4. * 3, 45 / THE CIT(A)-8, AHMEDABAD. 5. 678 ,2 -2 ! 1 / DR, ITAT, AHMEDABAD 6. 89:+ GUARD FILE. # $ / BY ORDER, '6, , //TRUE COPY// P %/$ &' ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD