Air India Ltd., New Delhi V. ITO (TDS)(International Taxation), New Delhi

ITA 2260/DEL/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 5864 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 13-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR SHIV SWAROOP SINGH SENIOR
• Assessee Lawyers: RAJIV PAL PURI
• Keywords: Recovery proceedings; Double taxation relief; Permanent establishment; TDS; Set aside
• Section: 206AA; 195; 200A; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D : NEW DELHI) BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER (THROUGH VIDEO CONFERENCE) ITA NO.2260/DEL./2017 (ASSESSMENT YEAR : 2013-14) (2 ND QUARTER OF FORM 27Q OF FY 2012-13) ITA NO.2261/DEL./2017 (ASSESSMENT YEAR : 2013-14) (3 RD QUARTER OF FORM 27Q OF FY 2012-13) ITA NO.2262/DEL./2017 (ASSESSMENT YEAR : 2013-14) (4 TH QUARTER OF FORM 27Q OF FY 2012-13) AIR INDIA LIMITED, VS. ITO, TDS WARD 1(1)(1), 113, AIRLINES HOUSE, INTERNATIONAL TAXATION, GURUDWARA RAKAB GANJ ROAD, NEW DELHI. NEW DELHI 110 001. (PAN : AACCN6194P) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAJIV PAL PURI, CA REVENUE BY : DR. SHIV SWAROOP SINGH, SENIOR DR DATE OF HEARING : 05.04.2021 DATE OF ORDER : 23.04.2021 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : ITA NOS.2260, 2261 & 2262/DEL./2017 2 SINCE COMMON QUESTIONS OF FACTS AND LAW HAVE BEEN R AISED IN THE AFORESAID APPEALS, THE SAME ARE BEING DISPOS ED OFF BY WAY OF COMPOSITE ORDER TO AVOID REPETITION OF DISCUSSION. 2. APPELLANT, M/S. AIR INDIA LIMITED (HEREINAFTER R EFERRED TO AS THE ASSESSEE) BY FILING THE PRE S ENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDERS ALL DATED 31.01.2017 PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-42, NEW DELHI QUA THE ASSES SMENT YEAR 2013-14 (2 ND QUARTER OF FORM 27Q OF FY 2012-13), (3 RD QUARTER OF FORM 27Q OF FY 2012-13) & (4 TH QUARTER OF FORM 27Q OF FY 2012-13) ON THE IDENTICAL GROUNDS EXCEPT THE DIFFER ENCE IN THE AMOUNT OF ADDITION INTER ALIA THAT :- YOUR HONOUR, MAY AS AN ACT OF KINDNESS, IN THE INT EREST OF JUSTICE AND AS APPROPRIATE TO THE FACTS AND CIRCUMS TANCES OF THIS CASE, BE PLEASED TO :- 1. DELETE THE DEMAND OF RS.73,00,719/-, RS.80,82,66 2/- & RS.57,05,582/- RAISED ON ACCOUNT OF SHORT DEDUCTION OF TAX FOR SECOND QUARTER, THIRD QUARTER AND FOURTH QUARTER OF FY 2012-13 RESPECTIVELY. 2. DELETE THE DEMAND OF RS.15,28,222/-, RS.13,78,10 8/- &RS.8,07,085/- RAISED ON ACCOUNT OF INTEREST ON SHO RT DEDUCTION DEMAND OF RS.73,00,719/-, RS.80,82,662/- & RS.57,05 ,582/- FOR SECOND QUARTER, THIRD QUARTER AND FOURTH QUARTER OF FY 2012-13 RESPECTIVELY. 3. ISSUE SUCH DIRECTIONS OR PASS SUCH ORDERS AS YO UR HONOUR MAY DEEM FIT AND PROPER. 3. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : M/S. AIR INDIA LTD., THE ASSESSEE IS A GOVERNMENT OWNED COMPANY, WHICH IS INTO TRANSPORTAT ION OF ITA NOS.2260, 2261 & 2262/DEL./2017 3 GOODS, PASSENGERS AND PARCELS ETC. IN DOMESTIC AND INTERNATIONAL SECTOR THROUGH AIRCRAFTS AND AS SUCH, IS A NATIONAL CARRIER OF INDIA. THE ASSESSEE HAS BEEN REGULARLY FILING THEIR TDS RE TURN BY DEPOSITING TAXES IN TIME IN ACCORDANCE WITH THE INC OME-TAX RULES, 1962. THE ASSESSEE FILED TDS RETURN FOR SECOND QUA RTER, THIRD QUARTER AND FOURTH QUARTER OF FY 2012-13 ON 30.08.2 013 VIDE ACKNOWLEDGEMENT NOS.070462000344842, 07046200034485 3 & 070462000344864 RESPECTIVELY. ACCORDINGLY, AN ORDE R UNDER SECTION 200A OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT) WAS PASSED AND THEREAFTER AN ORDER U/S 154 OF THE ACT W AS RECEIVED BY THE ASSESSEE ON 04.03.2014 FOR SECOND QUARTER, THIR D QUARTER AND FOURTH QUARTER OF FY 2012-13. 4. IT IS ALSO INTIMATED BY WAY OF NOTICE U/S 154 OF THE ACT THAT THERE IS DEMAND OF SHORT DEDUCTION OF RS73,00,719.7 7, RS.80,82,662.74 & RS.57,05,582.11 FOR SECOND QUARTE R, THIRD QUARTER AND FOURTH QUARTER OF FY 2012-13 RESPECTIVE LY ON ACCOUNT OF NON-PROVISION OF PAN IN CASE OF ENGINE LEASE FIN ANCE B.V. (ELFC), A NON-RESIDENT COMPANY, TAXED RESIDENT IN N EITHERLAND, WHICH WAS NOT MENTIONED AT THE TIME OF RETURN AS TH E FOREIGN COMPANY DID NOT HAVE PAN. ASSESSEE CLAIMED TO HAVE TAKEN AN ENGINE ON LEASE UNDER AN AGREEMENT FROM ENGINE LEAS E FINANCE B.V. AND BY MISTAKE UNKNOWINGLY DEPOSITED THE TAX A T 2.31% ON ITA NOS.2260, 2261 & 2262/DEL./2017 4 VARIOUS PAYMENTS MADE TO THEM DURING THE YEAR UNDER CONSIDERATION BY TREATING THE SAME AS AN INDIAN COM PANY, WHEREAS TAXES LIABLE TO BE DEDUCTED ARE TO BE ABSORBED BY T HE LESSEE. SO, THE ASSESSEE HAS NOT DEDUCTED THE TDS FROM THE PAYMENT BUT HAS DEPOSITED FROM THEIR ACCOUNT AND ABSORBED IT AS COS T. 5. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT ( A) BY WAY OF FILING THE APPEALS WHO HAS CONFIRMED THE DEMANDS BY DISMISSING THE APPEALS. FEELING AGGRIEVED BY THE ORDER PASSED BY THE LD. CIT (A), THE ASSESSEE HAS COME UP BEFORE THE TRIBUNAL B Y WAY OF FILING THE PRESENT APPEALS. 6. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 7. UNDISPUTEDLY, THE DISPUTE IN THE INSTANT APPEAL S IS QUA APPLYING THE TDS RATE AT 20.12% OR 10% ON TRANSFER BETWEEN ELFC AND THE ASSESSEE FOR TAKING AN ENGINE ON LEASE UNDER AN AGREEMENT. IT IS ALSO NOT IN DISPUTE THAT ELFC, TH E LESSOR IS A FOREIGN COMPANY HAVING NO PERMANENT ESTABLISHMENT ( PE) AND WAS A TAX RESIDENT OF NEITHERLAND. IT IS ALSO NOT IN D ISPUTE THAT UNDER ARTICLE 7 OF DOUBLE TAXATION AVOIDANCE AGREEMENT (D TAA) BETWEEN INDIA AND NEITHERLAND, THE PROFITS OF ENTER PRISE OF A ITA NOS.2260, 2261 & 2262/DEL./2017 5 CONTRACTING STATE SHALL BE TAXABLE ONLY IN THAT STA TE UNLESS THE ENTERPRISE CARRIES ON BUSINESS IN THE OTHER CONTRAC TING STATE THROUGH A PERMANENT ESTABLISHMENT SITUATED THEREIN. IT I S ALSO NOT IN DISPUTE THAT ENGINE IS A PART OF AIRCRAFT AND CANNO T BE SAID TO BE AN AIRCRAFT AND THE PAYMENT BEING MADE FOR RENT OF ENG INE CAN BE COVERED UNDER EQUIPMENT AS PER SECTION 12(4) OF THE DTAA BETWEEN INDIA AND NEITHERLAND. IT IS ALSO NOT IN D ISPUTE THAT ASSESSEE HAS NOT DEDUCTED THIS TDS FROM THE PAYMENT BUT HAS DEPOSITED FROM THEIR OWN ACCOUNT AND HAS ABSORBED I T AS COST. IT IS ALSO NOT IN DISPUTE THAT SINCE PAYEE, ELFC, BEING A FOREIGN COMPANY HAVING NO PAN, THE ASSESSEE REPORTED THE TR ANSACTION WITHOUT PAN IN THE QUARTERLY TDS STATEMENTS. 8. IN THE BACKDROP OF THE AFORESAID UNDISPUTED FACT S AND CIRCUMSTANCES OF THE CASE, THE ARGUMENTS ADDRESSED AND CASE LAW RELIED UPON BY THE LD. AUTHORISED REPRESENTATIVES O F THE PARTIES TO THE APPEALS, THE SOLE QUESTION ARISES FOR DETERMINA TION IN THIS CASE IS :- AS TO WHETHER ASSESSEE WAS REQUIRED TO DEDUCT THE T AX AT SOURCE AT THE HIGHER RATE OF 20% IN CASE OF PAYEE WITHOUT PAN UNDER THE PROVISIONS CONTAINED U/S 206AA OF THE ACT, WHICH IS A NON- OBSTANTE CLAUSE OR ASSESSEE IS ENTITLED FOR BENEFIC IAL PROVISIONS OF DTAA BY DEDUCTING THE TAX AT SOURCE @ 10%? 9. WHEN WE EXAMINE PARAS 7.3 & 7.4 OF THE IMPUGNED ORDER PASSED BY THE LD. CIT (A), WE OBSERVED THAT LD. CIT (A) HAS ITA NOS.2260, 2261 & 2262/DEL./2017 6 PROCEEDED TO TAKE THE VIEW THAT SINCE THE ASSESSEE HAS SUO MOTO DEDUCTED THE TAX CONSIDERING IT TO BE CHARGEABLE TO TAX, IT IS NOT ENTITLED FOR BENEFICIAL PROVISIONS OF DTAA AND SECO NDLY, DTAA OVERRIDES DOMESTIC LAW IN CASE OF TAXPAYER ONLY AND NOT IN CASE OF THE DEDUCTOR AS IN THE INSTANT CASE. 10. IN REPLY TO THE AFORESAID VIEW TAKEN BY THE LD. CIT (A), THE LD. AR FOR THE ASSESSEE RELIED UPON THE ORDERS PASS ED BY THE COORDINATE BENCH OF THE TRIBUNAL IN CASE OF DDIT (I T-II), PUNE VS. SERUM INSTITUTE OF INDIA LTD. IN ITA NOS792/PN/ 2013 & ITA NOS.1601 TO 1604//PN/2014 ORDER DATED 30.03.201 5, DCIT VS. M/S. INFOSYS BPO LTD. IN ITA NOS.1333/BANG/2014 ORDER DATED 27.09.2019 AND THE JUDGMENT OF HONBLE DELHI HIGH COURT IN CASE OF DANISCO INDIA PVT. LTD. VS. UOI (2 018) 404 ITR 539 (DELHI). 11. COORDINATE BENCH OF THE TRIBUNAL IN CASE OF SERUM INSTITUTE OF INDIA LTD. (SUPRA) DECIDED THE IDENTICAL ISSUE AS TO NON- APPLICABILITY OF SECTION 206AA IN CASE OF NON-RESID ENT AS DTAA OVERRIDES THE ACT AS PER SECTION 90(2) BY RETURNING FOLLOWING FINDINGS :- 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISS IONS. SECTION 206AA OF THE ACT HAS BEEN INCLUDED IN PART B OF CHA PTER XVII DEALING WITH COLLECTION AND RECOVERY OF TAX - DEDUCTION AT SOURCE. SECTION 206AA OF THE ACT DEALS WITH REQUIREMENTS OF FURNISH ING PAN BY ANY PERSON, ENTITLED TO RECEIVE ANY SUM OR INCOME ON WH ICH TAX IS DEDUCTIBLE UNDER CHAPTER XVII-B, TO THE PERSON RESP ONSIBLE FOR ITA NOS.2260, 2261 & 2262/DEL./2017 7 DEDUCTING SUCH TAX. SHORN OF OTHER DETAILS, IN SO F AR AS THE PRESENT CONTROVERSY IS CONCERNED, IT WOULD SUFFICE TO NOTE THAT SECTION 206AA OF THE ACT PRESCRIBES THAT WHERE PAN IS NOT FURNISHED TO THE PERSON RESPONSIBLE FOR DEDUCTING TAX AT SOURCE THEN THE TA X DEDUCTOR WOULD BE REQUIRED TO DEDUCT TAX AT THE HIGHER OF THE FOLLOWI NG RATES, NAMELY, AT THE RATE PRESCRIBED IN THE RELEVANT PROVISIONS OF T HIS ACT; OR AT THE RATE/RATES IN FORCE; OR AT THE RATE OF 20%. IN THE PRESENT CASE, ASSESSEE WAS RESPONSIBLE FOR DEDUCTING TAX ON PAYMENTS MADE TO NON-RESIDENTS ON ACCOUNT OF ROYALTY AND/OR FEE FOR TECHNICAL SERV ICES. THE DISPUTE BEFORE US RELATES TO THE PAYMENTS MADE BY THE ASSES SEE TO SUCH NON- RESIDENTS WHO HAD NOT FURNISHED THEIR PANS TO THE A SSESSEE. THE CASE OF THE REVENUE IS THAT IN THE ABSENCE OF FURNISHING OF PAN, ASSESSEE WAS UNDER AN OBLIGATION TO DEDUCT TAX @ 20% FOLLOWI NG THE PROVISIONS OF SECTION 206AA OF THE ACT. HOWEVER, ASSESSEE HAD DEDUCTED THE TAX AT SOURCE AT THE RATES PRESCRIBED IN THE RESPECTIVE DT AAS BETWEEN INDIA AND THE RELEVANT COUNTRY OF THE NON-RESIDENTS; AND, SUCH RATE OF TAX BEING LOWER THAN THE RATE OF 20% MANDATED BY SECTIO N 206AA OF THE ACT. THE CIT(A) HAS FOUND THAT THE PROVISIONS OF SE CTION 90(2) COME TO THE RESCUE OF THE ASSESSEE. SECTION 90(2) PROVIDES THAT THE PROVISIONS OF THE DTAAS WOULD OVERRIDE THE PROVISIONS OF THE DOME STIC ACT IN CASES WHERE THE PROVISIONS OF DTAAS ARE MORE BENEFICIAL T O THE ASSESSEE. THERE CANNOT BE ITA NOS.1601 TO 1604/PN/2014 ANY DO UBT TO THE PROPOSITION THAT IN CASE OF NON-RESIDENTS, TAX LIAB ILITY IN INDIA IS LIABLE TO BE DETERMINED IN ACCORDANCE WITH THE PROVISIONS OF THE ACT OR THE DTAA BETWEEN INDIA AND THE RELEVANT COUNTRY, WHICHE VER IS MORE BENEFICIAL TO THE ASSESSEE, HAVING REGARD TO THE PR OVISIONS OF SECTION 90(2) OF THE ACT. IN THIS CONTEXT, THE CIT(A) HAS C ORRECTLY OBSERVED THAT THE HON'BLE SUPREME COURT IN THE CASE OF AZADI BACH AO ANDOLAN AND OTHERS VS. UOI, (2003) 263 ITR 706 (SC) HAS UPHELD THE PROPOSITION THAT THE PROVISIONS MADE IN THE DTAAS WILL PREVAIL OVER THE GENERAL PROVISIONS CONTAINED IN THE ACT TO THE EXTENT THEY ARE BENEFICIAL TO THE ASSESSEE. IN THIS CONTEXT, IT WOULD BE WORTHWHILE T O OBSERVE THAT THE DTAAS ENTERED INTO BETWEEN INDIA AND THE OTHER RELE VANT COUNTRIES IN THE PRESENT CONTEXT PROVIDE FOR SCOPE OF TAXATION A ND/OR A RATE OF TAXATION WHICH WAS DIFFERENT FROM THE SCOPE/RATE PR ESCRIBED UNDER THE ACT. FOR THE SAID REASON, ASSESSEE DEDUCTED THE TAX AT SOURCE HAVING REGARD TO THE PROVISIONS OF THE RESPECTIVE DTAAS WH ICH PROVIDED FOR A BENEFICIAL RATE OF TAXATION. IT WOULD ALSO BE RELEV ANT TO OBSERVE THAT EVEN THE CHARGING SECTION 4 AS WELL AS SECTION 5 OF THE ACT WHICH DEALS WITH THE PRINCIPLE OF ASCERTAINMENT OF TOTAL INCOME UNDER THE ACT ARE ALSO SUBORDINATE TO THE PRINCIPLE ENSHRINED IN SECT ION 90(2) AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF AZADI BACH AO ANDOLAN AND OTHERS (SUPRA). THUS, IN SO FAR AS THE APPLICABILIT Y OF THE SCOPE/RATE OF TAXATION WITH RESPECT TO THE IMPUGNED PAYMENTS MAKE TO THE NON- RESIDENTS IS CONCERNED, NO FAULT CAN BE FOUND WITH THE RATE OF TAXATION INVOKED BY THE ASSESSEE BASED ON THE DTAAS, WHICH P RESCRIBED FOR A BENEFICIAL RATE OF TAXATION. HOWEVER, THE CASE OF T HE REVENUE IS THAT THE TAX DEDUCTION AT SOURCE WAS REQUIRED TO BE MADE AT 20% IN THE ABSENCE OF FURNISHING OF PAN BY THE RECIPIENT NON-RESIDENTS , HAVING REGARD TO SECTION 206AA OF THE ACT. IN OUR CONSIDERED OPINION , IT WOULD BE QUITE INCORRECT TO SAY THAT THOUGH THE CHARGING SECTION 4 OF THE ACT AND SECTION 5 OF THE ACT DEALING WITH ASCERTAINMENT OF TOTAL INCOME ARE SUBORDINATE TO THE PRINCIPLE ENSHRINED IN SECTION 9 0(2) OF THE ACT BUT THE PROVISIONS OF CHAPTER ITA NOS.1601 TO 1604/PN/2 014 XVII-B GOVERNING TAX DEDUCTION AT SOURCE ARE NOT SUBORDINA TE TO SECTION 90(2) ITA NOS.2260, 2261 & 2262/DEL./2017 8 OF THE ACT. NOTABLY, SECTION 206AA OF THE ACT WHICH IS THE CENTRE OF CONTROVERSY BEFORE US IS NOT A CHARGING SECTION BUT IS A PART OF A PROCEDURAL PROVISIONS DEALING WITH COLLECTION AND D EDUCTION OF TAX AT SOURCE. THE PROVISIONS OF SECTION 195 OF THE ACT WH ICH CASTS A DUTY ON THE ASSESSEE TO DEDUCT TAX AT SOURCE ON PAYMENTS TO A NON-RESIDENT CANNOT BE LOOKED UPON AS A CHARGING PROVISION. IN-F ACT, IN THE CONTEXT OF SECTION 195 OF THE ACT ALSO, THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. ELI LILY & CO., (2009) 312 ITR 225 (SC) OBSERVED THAT THE PROVISIONS OF TAX WITHHOLDING I.E. SECTION 195 OF T HE ACT WOULD APPLY ONLY TO SUMS WHICH ARE OTHERWISE CHARGEABLE TO TAX UNDER THE ACT. THE HON'BLE SUPREME COURT IN THE CASE OF GE INDIA TECHN OLOGY CENTRE PVT. LTD. VS. CIT, (2010) 327 ITR 456 (SC) HELD THA T THE PROVISIONS OF DTAAS ALONG WITH THE SECTIONS 4, 5, 9, 90 & 91 OF T HE ACT ARE RELEVANT WHILE APPLYING THE PROVISIONS OF TAX DEDUCTION AT S OURCE. THEREFORE, IN VIEW OF THE AFORESAID SCHEMATIC INTERPRETATION OF T HE ACT, SECTION 206AA OF THE ACT CANNOT BE UNDERSTOOD TO OVERRIDE T HE CHARGING SECTIONS 4 AND 5 OF THE ACT. THUS, WHERE SECTION 90 (2) OF THE ACT PROVIDES THAT DTAAS OVERRIDE DOMESTIC LAW IN CASES WHERE THE PROVISIONS OF DTAAS ARE MORE BENEFICIAL TO THE ASSE SSEE AND THE SAME ALSO OVERRIDES THE CHARGING SECTIONS 4 AND 5 OF THE ACT WHICH, IN TURN, OVERRIDE THE DTAAS PROVISIONS ESPECIALLY SECTION 20 6AA OF THE ACT WHICH IS THE CONTROVERSY BEFORE US. THEREFORE, IN O UR VIEW, WHERE THE TAX HAS BEEN DEDUCTED ON THE STRENGTH OF THE BENEFI CIAL PROVISIONS OF SECTION DTAAS, THE PROVISIONS OF SECTION 206AA OF T HE ACT CANNOT BE INVOKED BY THE ASSESSING OFFICER TO INSIST ON THE T AX DEDUCTION @ 20%, HAVING REGARD TO THE OVERRIDING NATURE OF THE PROVI SIONS OF SECTION 90(2) OF THE ACT. THE CIT(A), IN OUR VIEW, CORRECTL Y INFERRED THAT SECTION 206AA OF THE ACT DOES NOT OVERRIDE THE PROV ISIONS OF SECTION 90(2) OF THE ACT AND THAT IN THE IMPUGNED CASES OF PAYMENTS MADE TO NON-RESIDENTS, ASSESSEE CORRECTLY APPLIED THE RATE OF TAX PRESCRIBED UNDER THE DTAAS AND NOT AS PER SECTION 206AA OF THE ACT BECAUSE ITA NOS.1601 TO 1604/PN/2014 THE PROVISIONS OF THE DTAA S WAS MORE BENEFICIAL. THUS, WE HEREBY AFFIRM THE ULTIMATE CON CLUSION OF THE CIT(A) IN DELETING THE TAX DEMAND RELATABLE TO DIFF ERENCE BETWEEN 20% AND THE ACTUAL TAX RATE ON WHICH TAX WAS DEDUCTED B Y THE ASSESSEE IN TERMS OF THE RELEVANT DTAAS. AS A CONSEQUENCE, REVE NUE FAILS IN ITS APPEALS. 12. AFORESAID VIEW TAKEN BY THE TRIBUNAL THAT SECON D 206AA OF THE ACT DOES NOT OVERRIDE THE PROVISIONS OF SECTION 90(2) OF THE ACT AND IN CASE OF PAYMENT MADE TO NON-RESIDENT, RATES AS PRESCRIBED UNDER DTAA ARE APPLICABLE HAS BEEN AFFIRMED BY HON BLE DELHI HIGH COURT IN CASE OF DANISCO INDIA PVT. LTD. (SUPR A) BY RETURNING FOLLOWING FINDINGS :- ITA NOS.2260, 2261 & 2262/DEL./2017 9 8. HAVING REGARD TO THE POSITION OF LAW EXPLAINED IN AZADI BACHAO ANDOLAN (SUPRA) AND LATER FOLLOWED IN NUMERO US DECISIONS THAT A DOUBLE TAXATION AVOIDANCE AGREEMENT ACQUIRES PRIM ACY IN SUCH CASES, WHERE RECIPROCATING STATES MUTUALLY AGREE UP ON ACCEPTABLE PRINCIPLES FOR TAX TREATMENT, THE PROVISION IN SECT ION 206AA (AS IT EXISTED) HAS TO BE READ DOWN TO MEAN THAT WHERE THE DEDUCTEE I.E THE OVERSEAS RESIDENT BUSINESS CONCERN CONDUCTS ITS OPE RATION FROM A TERRITORY, WHOSE GOVERNMENT HAS ENTERED INTO A DOUB LE TAXATION AVOIDANCE AGREEMENT WITH INDIA, THE RATE OF TAXATIO N WOULD BE AS DICTATED BY THE PROVISIONS OF THE TREATY. 13. KEEPING IN VIEW THE FACTS INTER ALIA THAT ENGIN E IS A PART OF AIRCRAFT AND CANNOT BE SAID TO BE AN AIRCRAFT AND P AYMENT MADE FOR RENT OF ENGINE ARE COVERED UNDER EQUIPMENT AS PER A RTICLE 12 (4) OF THE DTAA BETWEEN INDIA AND NEITHERLAND; THAT UNDER ARTICLE 12(4) OF THE DTAA BETWEEN INDIA AND NEITHERLAND, THE TERM ROYALTY DOES NOT COVER USE OF, OR THE RIGHT TO USE EQUIPMEN T ITSELF; THAT RENTAL OF AIRCRAFT ENGINE IS NEITHER A COPYRIGHT NO R A PAYMENT OF ANY INFORMATION; THAT UNDER ARTICLE 12(6) OF THE DTAA, FEE FOR TECHNICAL SERVICES ALSO DOES NOT INCLUDE THE AMOUNT PAID FOR SERVICES THAT ARE ANCILLARY AND SUBSIDIARY TO THE R ENTAL OF SHIPS, AIRCRAFTS, CONTAINERS OR OTHER EQUIPMENT USED IN CO NNECTION WITH THE OPERATION OF SHIPS OR AIRCRAFTS IN INTERNATIONAL TR AFFIC; THE ASSESSEE IS ENTITLED FOR BENEFICIAL PROVISIONS OF DTAA. 14. SO, FOLLOWING THE ORDER PASSED BY THE COORDINAT E BENCH OF THE TRIBUNAL IN CASES OF DDIT (IT-II), PUNE VS. SERUM INSTITUTE OF INDIA LTD., DCIT VS. M/S. INFOSYS BPO LTD. AND THE JUDGMENT OF HONBLE DELHI HIGH COURT IN CASE OF DANISCO INDIA ITA NOS.2260, 2261 & 2262/DEL./2017 10 PVT. LTD. VS. UOI, WE ARE OF THE CONSIDERED VIEW THAT LD. CIT (A) HAS ERRED IN HOLDING THAT IN THIS CASE, PROVISIONS CONTAINED U/S 206AA OVERRIDES BENEFICIAL PROVISIONS OF DTAA BETWE EN INDIA AND NEITHERLAND. CONSEQUENTLY, ASSESSEE HAS RIGHTL Y DEDUCTED THE TAX @ 10% AS PER PROVISIONS CONTAINED UNDER DTAA AS SECTION 206AA CANNOT HAVE OVERRIDING EFFECT ON DTAA, HENCE NO DEMAND IS PAYABLE BY THE ASSESSEE. HENCE, QUESTION FRAMED IS DECIDED IN FAVOUR OF THE ASSESSEE. SO, ADDITIONS MADE BY THE AO AND CONFIRMED BY THE LD. CIT (A) TO THE TUNE OF RS.73,0 0,719.77, RS.80,82,662.74 & RS.57,05,582.11 FOR SECOND QUARTE R, THIRD QUARTER AND FOURTH QUARTER OF FY 2012-13 RESPECTIVE LY IS ORDERED TO BE DELETED. CONSEQUENTLY, ALL THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 23 RD DAY OF APRIL , 2021. SD/- SD/- (ANIL CHATURVEDI) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 23 RD DAY OF APRIL, 2021 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-42, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.