Srei Alternative Investment Managers Ltd., Kolkata V. ITO, (International Taxation), kolkata, Kolkata

ITA 384/KOL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1546 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 13-04-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 08-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N B SOM CIT LD
• Assessee Lawyers: VINOD KUMAR DUBEY F CA LD
• Keywords: Business income; Residential status; Double taxation relief; Retrospective amendment; Permanent establishment
• Section: 206AA

Judgement Text

1 ITA NOS. 384 TO 389/KOL/16 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA BEFORE: SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUD ICIAL MEMBER I.T.A NO. 384/KOL/2016 A.Y: 2011-12 SREI ALTERNATIVE INVESTMENT VS. INCOME TAX OFFICER MANAGERS LTD. (IT),WARD-2(1), KOLKATA PAN: AAGCS 5232F [APPELLANT] [RESPONDENT] I.T.A NO. 385/KOL/2016 A.Y: 2011-12 SREI INFRASTRUCTURE FINANCE VS. INCOME TAX OFFICER LTD. PAN: AAACS1425L (INTERNATIONAL TAXATION) WARD-2(1), KOLKATA [APPELLANT] [RESPONDENT] I.T.A NOS. 386 TO 389/KOL/2016 A.YS: 2011-12 & 2012- 13 SREI INFRASTRUCTURE FINANCE VS. INCOME TAX OFFICER LTD. PAN: AAACS1425L (IT),WARD-2(1), KOLKATA [APPELLANT] [RESPONDENT] FOR THE APPELLANT : SHRI VINOD KUMAR DUBEY, F CA, LD.AR FOR THE RESPONDENT : SHRI N.B. SOM, ADDL. CIT, LD. SR.DR DATE OF HEARING : 15-06-2017 DATE OF PRONOUNCEMENT : 13-09-2017 ORDER SHRI S.S.VISWANETHRA RAVI, JM: ALL THESE SIX APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS), 22, KOLKATA ALL DT. 25-11-2015 FOR THE A.YS 2011-12 & 2012-13, WHEREIN HE CONFIRMED THE ACTION OF THE AO IN ISSUING AN INT IMATION OF DEMAND ALONG WITH CHARGING OF INTEREST RAISED U/S. 200A/20 1(1A) OF THE ACT FOR SHORT DEDUCTION OF TDS FOR THE A.YS 2011-12 & 2012-13. 2 ITA NOS. 384 TO 389/KOL/16 2. SINCE ALL THESE ISSUES RAISED IN RESPECTIVE APPE ALS AS ABOVE ARE IDENTICAL AND SIMILAR TO EACH OTHER INVOLVING ONE A SSESSEE, THEREFORE, ALL THE ISSUES HEARD TOGETHER AS ONE ISSUE AND DISP OSE OF THE SAME BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 3. THE ONLY EFFECTIVE ISSUE INVOLVED IS TO BE DECI DED AS TO WHETHER THE CIT-A JUSTIFIED IN CONFIRMING THE ISSUANCE OF I NTIMATION FOR SHORT DEDUCTION OF TDS IGNORING THE SETTLED PROVISION OF DTAA OVERRIDES THE PROVISIONS OF THE I.T ACT IN THE FACTS AND CIRC UMSTANCES OF THE CASE. 4. WE SHALL TAKE UP ITA NO. 384/KOL/2016 OF ASSESSE E. 5. THE LD.AR SUBMITS THAT THE ASSESSEE FILED ITS ST ATEMENT OF DEDUCTION OF TAX IN FORM 27Q IN RESPECT OF PAYMENT MADE TO NON- RESIDENT FOR THE QUARTER OF F.Y 2010-11 RELATING TO A.Y 2011-12. THE ASSESSEE HAS DEDUCTED THE TDS @ 10% AMOUNTING TO RS .1,70,901/- IN RESPECT OF PAYMENT OF RS. 17,09,099/-. 6. THE SAID DEDUCTION OF TAX RATE OF 10% IS UNDER F ORCE BY DOUBLE TAX AVOIDANCE AGREEMENT (DTAA). THE AO RAISED A DEM AND OF RS.2,06,800/- ON ACCOUNT OF SHORT DEDUCTION OF TAX (RS.3,41,820- RS.1,70,910) VIDE INTIMATION DT. 19-11-2012. 7. THE ASSESSEE CHALLENGED THE SAME BEFORE THE CIT- A. BEFORE THE CIT-A THE ASSESSEE CONTENDED THAT THE SAID PAYMENT WAS MADE TO MR. DANIEL YUL SINN YEUNG OF SINGAPORE TOWARDS CONS ULTANCY SERVICES IN RESPECT OF DEVELOPING FUND MANAGEMENT INITIATIVE S AND MOBILIZING FUNDS. THE SAID PAYMENT WAS MADE AS PER ARTICLE 12( 4) OF THE INDO- SINGAPORE OF DTAA UNDER THE HEAD FEES FOR TECHNIC AL SERVICES. THE ASSESSEE FURTHER CONTENDED THAT THE SAID SERVICES D OES NOT FALL WITHIN THE DEFINITION OF TERM FEES FOR INCLUDED SERVICES AS DEFINED IN INDO- SINGAPORE DTAA AS THE SAID PERSON DID NOT MAKE AVAI LABLE ANY TECHNICAL KNOW-HOW TO THE ASSESSEE AND DOES NOT HAV E ANY FIXED DAY IN INDIA NOR HE STAYS IN INDIA EXCEEDED IN AGGREGAT E 90 DAYS IN THE 3 ITA NOS. 384 TO 389/KOL/16 RELEVANT F.Y. BUT BY MISTAKE OUT OF IGNORANCE THE A SSESSEE HAS DEDUCTED TAX @10% IN RESPECT OF SAID PAYMENTS MADE TO SAID PERSON. 8. BASING ON THE SUBMISSIONS OF ASSESSEE THE CIT- A FORMULATED THE ISSUE THAT AS TO WHETHER THE CONSULTANCY FEES P AID TO MR. DANIEL OF SINGAPORE AS PER INDO-SINGAPORE DTAA IS TAXABLE IN INDIA OR NOT. THE CIT-A READ DOWN ARTICLE 12(4) OF INDO-SINGAPOR E DTAA AND HELD THAT THE SAID PERSON PROVIDED CONSULTANCY SERVICES TO THE ASSESSEE FOR DEVELOPING FUND & MANAGEMENT INITIATIVES AND MOBIL ISATION OF FUNDS AND THE ASSESSEE APPLIED THE SAID SERVICES IN ITS B USINESS AND SAID SERVICES IS DIRECTLY FALL UNDER THE DEFINITION OF FEES FOR TECHNICAL SERVICES AND IT IS TAXABLE IN INDIA. 9. FURTHER, THE CIT-A HELD THAT THE SAID PERSON BEI NG NON RESIDENT TO WHOM THE ASSESSEE PAID THE SAID AMOUNT HAS TO OB TAIN PAN (PERMANENT ACCOUNT NUMBER) AND FOR NON SUBMISSION OF SUCH PAN THE AO WAS JUSTIFIED IN RAISING THE DEMAND. RELEVAN T PORTION OF FINDING IS REPRODUCED HEREIN BELOW:- 7.3 IN THE PRESENT CASE THERE IS NO DISPUTE THAT T HE DEDUCTEE IS ENTITLED TO RECEIVE CERTAIN SUM WHOSE INCOME IS TAXABLE IN INDIA AND TA X IS REQUIRED TO BE DEDUCTED FROM SUCH INCOME UNDER CHAPTER XVIIB. THE RELIANCE PLACE D BY APPELLANT ON THE DECISION OF HON'BLE ITAT IN THE CASE OF SERUM INSTITUTE MAY NOT BE HELPFUL AS THE HON'BLE ITAT HAS NOT CONSIDERED THE DECISION OF THE ITAT BANGALORE B ENCH 'C' IN THE CASE OF BOSCH LTD. V. INCOME TAX OFFICER, INTERNATIONAL TAXATION, BANGAL ORE [2012] 28 TAXMANN.COM 228 (BANGALORE TRIB.) WHEREIN IT WAS HELD THAT. THE PROVISIONS OF SEC. 206AA CLEARLY OVERRIDES THE OTHER PROVISIONS OF THE ACT. THEREFORE, A NON RESIDENT WHOSE INCOME IS CHARGEABL E TO TAX IN INDIA HAS TO OBTAIN PAN NO. AND PROVIDE THE SAME TO THE ASSESSEE DEDUCTOR. THE ONLY EXEMPTION GIVEN IS THAT NON RESIDENT WHOSE INCOME IS NOT CHARGEABLE TO TAX IN INDIA ARE NOT REQUIRED TO APPLY AND OBTAIN PAN NO. HOWEVER, WHERE THE INCOME IS CHA RGEABLE TO TAX IRRESPECTIVE OF THE RESIDENTIAL STATUS OF THE RECIPIENTS, EVERY ASSESSE E IS REQUIRED TO OBTAIN THE PAN NO. AND THIS PROVISION IS BROUGHT IN TO ENSURE THAT THE RE IS NO EVASION OF TAX BY THE FOREIGN ENTITIES. IN THE INSTANT CASE, THE RECIPIENTS ARE N ONRESIDENTS AND ADMITTEDLY THE INCOME EXCEEDS THE TAXABLE LIMIT PRESCRIBED BY THE RELEVANT FINANCE ACT. IN THE CIRCUMSTANCES, THE RECIPIENTS ARE BOUND AND ARE UND ER AN OBLIGATION TO OBTAIN THE PAN AND FURNISH THE SAME TO THE ASSESSEE. FOR FAILURE T O DO SO, THE ASSESSEE IS LIABLE TO WITHHOLD TAX AT THE HIGHER OF RATES PRESCRIBED UNDE R SECTION 206AA I.E. 20% AND THE COMMISSIONER (APPEALS) HAS RIGHTLY HELD THAT THE PR OVISION OF SECTION 206AA ARE APPLICABLE TO THE ASSESSEE'. [PARA 21) 7.4 THE RELIANCE OF THE ASSESSEE ON THE HON'BLE SU PREME COURT IN THE CASE OF AZADI BACHAO ANDOLAN IS ALSO NOT HELPFUL AS THE HON'BLE C OURT WHILE DECIDING THAT THE DTAAS WOULD OVERRIDE THE PROVISIONS OF THE INCOME TAX ACT IN THE MATTER OF ASCERTAINMENT OF CHARGEABILITY TO INCOME TAX AND ASCERTAINMENT OF TO TAL INCOME, CREATED A CAVEAT I.E., IT TO THE EXTENT OF INCONSISTENCY WITH THE TERMS OF TH E DTAA'. THE HON'BLE COURT MAKES IT ABUNDANTLY CLEAR THAT THERE SHOULD EXIST INCONSISTE NCY BETWEEN THE INCOME TAX ACT AND THE DTAA FOR THE PROVISIONS OF THE DTAA TO OVERRIDE THE PROVISIONS OF THE INCOME TAX ACT. IN THE PRESENT CASE THERE IS NO INCONSISTENCY EXISTING BETWEEN THE PROVISIONS OF 4 ITA NOS. 384 TO 389/KOL/16 SECTION 206AA OF THE INCOME TAX ACT AND THE DTAA BE TWEEN THE INDIA AND SOUTH AFRICA. NOWHERE IN THE DTAA IT IS PROVIDED THAT IF THE PART Y IN ANY OF THE CONTRACTING STATE VIOLATE THE DOMESTIC LAW EVEN THEN THEY ARE ELIGIBL E TO CLAIM THE BENEFIT OF LOWER TAXATION AS PER THE TREATY. IN THE PRESENT CASE, TH E NONRESIDENT PARTY WERE EXPLICITLY OBLIGED TO OBTAIN PAN BECAUSE THEY WERE PERSONS ENT ITLE TO RECEIVE ANY SUM OR INCOME OR AMOUNT AND THEIR INCOME IS CHARGEABLE TO TAX. IN THE EVENT THE NONRESIDENT RECIPIENT WHO HAVE NOT OBTAINED PAN, HAVE THE OPTIO N OF CLAIMING REFUND OF TAXES PAID IN EXCESS OF THE RATE PRESCRIBED BY THE DTAA, BY SU BSEQUENTLY FILING A RETURN IN INDIA. THEREFORE THERE IS NOT PREJUDICE CAUSED TO THE NON RESIDENT 7.5 THE SECTION 206AA WAS INTRODUCED TO PENALISE T HOSE WHO DO NOT OBTAIN AND FURNISH THEIR PAN DETAILS TO THE DEDUCTOR AND IT OV ERRIDES OTHER PROVISIONS OF THE ITA FOR IT BEGINS WITH A NON OBSTANTE CLAUSE 'NOTWITHSTANDI NG ANYTHING CONTAINED IN THE ANY OTHER PROVISIONS IN THIS ACT'. THE HON'BLE SUPREME COURT IN THE CASE OF CHANDAVARKARSITARATNARAO V. ASHALATA S. GURAM REPOR TED IN [1986] 4 SCC 447, EXPLAINED THE SCOPE OF NONOBSTANTE CLAUSE IN THE F OLLOWING WORDS: 'A CLAUSE BEGINNING WITH THE EXPRESSION 'NOTWITHS TANDING ANYTHING CONTAINED IN THIS ACT OR IN SOME PARTICULAR PROVISION IN THE ACT OR IN SOME PARTICULAR ACT OR IN ANY LAW FOR THE TIME BEING IN FORCE, OR IN ANY CONTRACT ' IS MORE OFTEN THAN NOT APPENDED TO A SECTION IN THE BEGINNING IT IS EQUIVALENT TO SAYI NG THAT IN SPITE OF THE PROVISION OF THE ACT OR ANY OTHER ACT MENTIONED IN THE NON OBSTANTE CLAUSE OR ANY CONTRACT OR DOCUMENT MENTIONED THE ENACTMENT FOLLOWING IT WILL HAVE ITS FULL OPERATION OR THAT THE PROVISIONS EMBRACED IN THE NON OBSTANTE CLAUSE WOULD NOT BE AN IMPEDIMENT FOR AN OPERATION OF THE ENACTMENT'. THUS, IT IS CLEAR THAT THE TAX TREATY BENEFIT WOULD BE AVAILABLE TO THE APPELLANT ON COMPLIANCE WITH THE PROVISION OF SECTION 206AA O F THE ITA. FURTHER, IF THE VIEW ADOPTED BY THE HON'BLE PUNE ITAT IS FOLLOWED THEN T HE PROVISIONS OF SECTION 206AA WOULD BECOME COMPLETELY REDUNDANT AND WOULD NOT APP LY TO NONRESIDENTS FROM THOSE COUNTRIES WHICH HAVE TAX TREATIES. THIS HOWEVER, WA S NEVER THE INTENTION OF LAW AND HENCE IS NOT THE CORRECT PRINCIPLE OF LAW. IN FACT, THE MEMORANDUM EXPLAINING THE PROVISIONS OF SECTION 206AA READ WITH RULE 114 OF T HE INCOME TAX RULES SUGGEST THAT ANY PERSON, INCLUDING NONRESIDENTS, WHO IS ENTITLE D TO RECEIVE ANY SUM OR INCOME OR AMOUNT, ON WHICH TAX IS DEDUCTIBLE IN ANY FINANCIA L YEAR IS REQUIRED TO OBTAIN A PAN, MEMORANDUM EXPLAINING THE PROVISIONS OF THE FINANCE (NO, 2) BILL, 2009 AND THE CIRCULAR NO 5 ISSUED BY CBDT CLARIFYING THE PROVISI ONS OF THE FINANCE (NO 2) ACT 2009 IS EXTRACTED BELOW: 'STATUTORY PROVISIONS MANDATING QUOTING OF PERMANEN T ACCOUNT NUMBER (PAN) OF DEDUCTEES IN TAX DEDUCTION AT SOURCE (TDS) STAT EMENTS EXIST SINCE 2001 DULY BACKED BY PENAL PROVISIONS. THE PROCESS OF ALLOTMEN T OF PAN HAS BEEN STREAMLINED SO THAT OVER 75 LAKH PANS ARE BEING ALLOTTED EVERY YEA R. PUBLICITY CAMPAIGNS FOR QUOTING PAN ARE BEING RUN SINCE THE LAST THREE YEARS. THE A VERAGE TIME OF ALLOTMENT OF PAN HAS COME DOWN TO 10 CALENDAR DAYS. THEREFORE, NONAVAIL ABILITY OF PAN HAS CEASED TO BE AN IMPEDIMENT. IN A NUMBER OF CASES, THE NONQUOTING O F PAN'S BY DEDUCTEES IS CREATING PROBLEMS IN THE PROCESSING OF RETURN OF INCOME AND IN GRANTING CREDIT FOR TAX DEDUCTED AT SOURCE, LEADING TO DELAYS IN ISSUE OF REFUNDS. IN ORDER TO STRENGTHEN THE PAN MECHANISM, IT IS PRO POSED TO MAKE AMENDMENTS IN THE INCOMETAX ACT TO PROVIDE THAT ANY PERSON WH OSE RECEIPTS ARE SUBJECT TO DEDUCTION OF TAX AT SOURCE I.E THE DEDUCTEE, SHALL MANDATORILY FURNISH HIS PAN TO THE DEDUCTOR, FAILING WHICH THE DEDUCTOR SHALL DEDUCT T AX AT SOURCE AT HIGHER OF THE FOLLOWING RATES: (I) THE RATE PRESCRIBED IN THE ACT; (II) AT THE RATE IN FORCE, I.E THE RATE MENTIONED I N THE FINANCE ACT; OR AT THE RATE OF 20 PER CENT. 7.6 SECTION 206AA SHOULD THUS BE CONSIDERED AS AN A NTIAVOIDANCE PROVISION. THE INTERNATIONAL LAW (INCLUDING DECD AND UN COMMENTARI ES) RECOGNIZE THE FACT THAT ANTI AVOIDANCE PROVISIONS ARE SPECIFICALLY ENACTED TO PR EVENT MISUSE OF TREATY BENEFITS AND THAT THE SAME SHALL OVERRIDE THE TREATY. THE LEGIS LATURE HAS INCORPORATED THE RECOGNITION MADE BY OECD AND UN COMMENTARY BY INSE RTING SECTION 90(2A) IN THE IT ACT WITH EFFECT FROM A.Y 201617 WHICH OVERRULES SE CTION 90(2) OF THE ACT. THE SUPREME COURT OF INDIA IN THE CASE OF BASAWARAJ & A NR. VERSUS THE SPL. LAND ACQUISITION OFFICER REPORTED IN (2013) 14 SCC 81 1 HAD HELD THAT A RESULT FLOWING FROM A STATUTORY PROVISION IS NEVER AN EVIL. A COURT HAS NO POWER TO IGNORE THAT PROVISION TO RELIEVE WHAT IT CONSIDERS A DISTRESS RESULTING FROM ITS OPERATION. THE STATUTORY PROVISION MAY CAUSE HARDSHIP OR INCONVENIENCE TO A PARTICULAR PARTY BUT THE COURT HAS 5 ITA NOS. 384 TO 389/KOL/16 NO CHOICE BUT TO ENFORCE IT GIVING FULL EFFECT TO T HE SAME. THE LEGAL MAXIM DURA LEX SED LEX WHICH MEANS THE LAW IS HARD BUT IT IS THE L AW, STANDS ATTRACTED IN SUCH A SITUATION. IT HAS CONSISTENTLY BEEN HELD THAT INCO NVENIENCE IS NOT A DECISIVE FACTOR TO BE CONSIDERED WHILE INTERPRETING A STATUTE. 10. THE LD.AR OF THE ASSESSEE SUBMITS THAT THE ISSU E IN HAND IS SQUARELY COVERED BY THE ORDER OF THE HONBLE SPECIA L BENCH (ITAT HYDERABAD) IN THE CASE OF NAGARGUNA FERTILIZERS & C HEMICALS LTD VS. ACCIT, CIR-15(1), HYDERABD REPORTED IN (2017) 78 TA XMANN. COM 264(HYD-TRIB)(SB) AND SUBMITS THAT THE SPECIAL BENC H HELD THAT THE PROVISIONS OF SECTION 206AA OF THE ACT DESPITE THE NON-OBSTANTE CLAUSE CONTAINED THEREIN CANNOT OVERRIDE THE PROVIS IONS OF DTAA TO THE EXTENT THEY ARE MORE BENEFICIAL TO THE ASSESSEE . HE FURTHER SUBMITS THAT THE HONBLE SPECIAL BENCH IN THE CASE OF SUPRA HELD THAT THE ASSESSEE CANNOT BE HELD LIABLE TO DEDUCT T AX AT HIGHER RATES PRESCRIBED U/S. 206AA OF THE ACT IN THE CASE OF PAY MENTS MADE TO NON-RESIDENT PERSON(S) HAVING TAXABLE INCOME IN IND IA FOR NON SUBMISSIONS OF PAN AND REFERRED TO PARAS 30 TO 33 O F THE SAID ORDER AND PRAYED THAT THE GROUNDS RAISED BY THE ASSESSEE MAY BE ALLOWED. 11. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORD ERS OF THE AUTHORITIES BELOW. HE ALSO SUBMITS THAT NO PAN WAS FURNISHED AND THE PROVISIONS OF SECTION 206AA IS CORRECTIVE PROVISION AND NON RESIDENT ALSO REQUIRED TO FURNISH PAN AND PRAYED TO DISMISS THE GROUNDS OF APPEAL. 12. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERI AL ON RECORD. WE FIND AS REFERRED BY THE LD.AR REGARDING THE DEC ISION OF THE HONBLE SPECIAL BENCH AT HYDERABAD DECIDED THE SIMI LAR ISSUE ARISING OUT OF CONFLICTING DECISIONS OF BANGALORE BENCH IN THE CASE OF BOSCH LTD AND PUNE BENCH IN THE CASE OF SERUM INSTITUTE OF INDIA LIMITED SUPRA. THE SPECIAL BENCH FORMULATED THE QUESTION AS UNDE R:- WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE PROVISIONS OF SECTION 206AA OF THE ACT HAVE AN OVERRIDE EFFECT FOR ALL OTHER PRO VISIONS OF THE ACT AND THE ASSESSEE IS REQUIRED TO DEDUCT TAX THEREIN IN THE CASE OF PERSO N(S) HAVING TAXABLE INCOME IN INDIA, INCLUDING NONRESIDENT, WHO DOES NOT FURNISH THEIR PAN ? 6 ITA NOS. 384 TO 389/KOL/16 13. THE SPECIAL BENCH OBSERVED THAT SECTION 206AA F ALLS IN CHAPTER XVII-B OF THE ACT DEALING WITH TAX DEDUCTION AT SOU RCE, IT FOLLOWS THAT THE TREATY PROVISIONS WHICH OVERRIDE EVEN THE CHARG ING PROVISION BY VIRTUE OF SECTION 90(2) OF THE ACT WOULD ALSO OVERR IDE THE PROVISIONS OF SECTION 206AA IRRESPECTIVE OF NON-OBSTANTE CLAUSE C ONTAINED THEREIN AND THE SAME IS REQUIRED TO BE RESTRICTED TO THAT E XTENT AND READ DOWN TO GIVE EFFECT TO THE RELEVANT PROVISIONS OF D TAA, WHICH ARE OVERRIDING BEING BENEFICIAL TO THE ASSESSEE. THE SP ECIAL BENCH OPINED AND HELD THAT THE PROVISIONS OF SECTION 206AA OF TH E ACT WILL NOT HAVE OVERRIDING EFFECT FOR ALL OTHER PROVISIONS OF THE A CT AND THE PROVISIONS OF THE TREATY TO WHICH EXTENT THEY ARE MORE BENEFIC IAL TO THE ASSESSEE. RELEVANT FINDINGS OF THE SPECIAL BENCH I N THE CASE OF SUPRA HELD AS UNDER:- 30. THE RATIO OF THE TWO DECISIONS OF THE HONBLE SUPREME COURT IN THE CASE OF HI LILLY AND CO. (INDIA) P. LIMITED (SUPRA) AND G.E. T ECHNOLOGY CENTRE (P) LIMITED (SUPRA) AS DISCUSSED ABOVE CLEARLY SHOWS THAT THE CHARGING PROVISIONS CONTROL AND OVERRIDE THE MACHINERY PROVISIONS DEALING WITH TAX DEDUCTION AT SOURCE. SIMILARLY, THE PROVISIONS OF DTAAS BY VIRTUE OF SECTION 90(2) TO THE EXTENT MORE BENEFICIAL TO THE ASSESSEE OVERRIDE THE PROVISIONS OF DOMESTIC LAW AS HELD INTER ALIA, BY THE HON'BLE SUPREME COURT IN THE CASE OF AZADI BACHAO ANDOLAN & ANOTHER (.SUPRA) AND P.V.A.L., KULANDAGAN CHETTIAR (SUPRA). SINCE SECTION 206AA FALLS IN CHAPTER XVII B DEALING WITH TAX DEDUCTION AT SOURCE, IT FOLLOWS THAT THE' TREATY PROVISIONS WHIC H OVERRIDE EVEN THE CHARGING PROVISION OF THE DOMESTIC LAW BY VIRTUE OF SECTION 90(2) WOUL D ALSO OVERRIDE THE MACHINERY PROVISIONS OF SECTION 206AA IRRESPECTIVE OF NONOBS TANTE CLAUSE CONTAINED THEREIN AND THE SAME IS REQUIRED TO BE RESTRICTED TO THAT EXTEN T AND READ DOWN TO GIVE EFFECT TO THE RELEVANT PROVISIONS OF DTAS, WHICH ARE OVERRIDING B EING BENEFICIAL TO THE ASSESSEE. 31. THERE IS ONE MORE BASIS TO SUPPORT THE ABOVE C ONCLUSION. AS RIGHTLY POINTED OUT ON BEHALF OF THE ASSESSEE, CHAPTERXA CONTAINING TH E PROVISION RELATING TO GENERAL ANTI AVOIDANCE RULE (GAAR) HAS BEEN INSERTED IN THE STAT UTE BY THE FINANCE ACT, 2013 WITH EFFECT FROM 1 ST APRIL, 2016 AND ALTHOUGH THE PROVISIONS CONTAINED IN THE SAID CHAPTER ARE GIVEN OVERRIDING EFFECT BY VIRTUE OF NONOBSTANTE CLAUSE CONTAINED IN SECTION 95, A SEPARATE PROVISION HAS BEEN INSERTED SIMULTANEOUSLY IN THE FORM OF SUBSECTION (2A) IN SECTION 90 PROVIDING SPECIFICALLY THAT NOTWITHSTAND ING ANYTHING CONTAINED IN SUBSECTION (2), THE PROVISIONS OF CHAPTER XA OF THE ACT SHALL APPLY TO THE ASSESSEE EVEN IF SUCH PROVISIONS ARE NOT BENEFICIAL TO HIM. AS RIGHTLY PO INTED OUT ON BEHALF OF THE ASSESSEE, NO SUCH PROVISION, HOWEVER, IS MADE SEPARATELY AND SPE CIFICALLY IN SECTION 90 TO GIVE OVERRIDING EFFECT TO SECTION 206AA OVERSECTION 9 0(2), WHICH CLEARLY SHOWS THAT THE INTENTION OF THE LEGISLATURE IS NOT TO GIVE OVERRI DING EFFECT TO SECTION 206AA OVER THE PROVISIONS OF THE RELEVANT DTAA WHICH ARE BENEFICIA L TO THE ASSESSEE. IN THE CASE OF SANOFI PASTEUR HOLDING SA V. DEPARTMENT OF REVENUE & OTHERS (SUPRA), THE CONTENTION RAISED ON BEHALF OF THE REVENUE WAS THAT THE RELEVA NT RETROSPECTIVE AMENDMENTS MADE IN THE INCOME TAX ACT, 1961 OVERRIDE THE TAX TREATI ES AND THE SAME WAS REJECTED BY THE HONBLE ANDHRA PRADESH HIGH COURT ON THE GROUND THA T THE RELEVANT AMENDMENTS WERE NOT FORTIFIED BY A NONOBSTANTE CLAUSE EXPRESSED TO OVERRIDE TAX TREATIES AS WAS MADE IN CASE OF THE GAAR PROVISIONS SPECIFICALLY BY INSERTI NG SUB SECTION (2A) IN SECTION 90 TO ENABLE APPLICATION OF CHAPTER XA EVEN IF THE SAME BE NOT BENEFICIAL TO THE ASSESSEE THEREBY ENACTING AN OVERRIDE EFFECT OVER THE PROVIS IONS OF SECTION 90(2). IN THE CASE OF BHARAT HARI SINGHANIA (SUPRA), IT WAS HELD BY THE H ON'BLE SUPREME COURT THAT THE SCOPE AND PURPORT OF THE NONOBSTANTE CLAUSE HAS TO BE AS CERTAINED BY READING IT IN THE CONTEXT OF THE RELEVANT PROVISIONS AND CONSISTENT WITH THE SCHEME OF THE ENACTMENT. AS EXPLAINED BY CBDT WHILE INSERTING THE PROVISION OF SECTION 20 6AA VIDE CIRCULAR NO. 5 OF 2010, THE INTENTION OF THE SAID PROVISION IS MAINLY TO STRENG THEN PAN MECHANISM AND KEEPING IN VIEW THIS LIMITED FUNCTION AND PURPOSE, WE ARE OF T HE VIEW THAT NONOBSTANTE CLAUSE CONTAINED IN THE MACHINERY PROVISION OF SECTION 206 AA IS REQUIRED TO BE ASSIGNED A RESTRICTIVE MEANING AND THE SAME CANNOT BE READ SO AS TO OVERRIDE EVEN THE RELEVANT 7 ITA NOS. 384 TO 389/KOL/16 BENEFICIAL PROVISIONS OF THE TREATIES, WHICH OVERRI DE EVEN THE CHARGING PROVISIONS OF THE INCOME TAX ACT BY VIRTUE OF SECTION 90(2). IN OUR O PINION, IT, THEREFORE, CANNOT BE SAID THAT THE PROVISIONS OF SECTION 206AA, DESPITE THE N ONOBSTANTE CLAUSE CONTAINED THEREIN, WOULD OVERRIDE THE PROVISIONS OF DTAA TO THE EXTENT THEY ARE MORE BENEFICIAL TO THE ASSESSEE AND IT IS THE BENEFICIAL PROVISION OF TREA TY THAT WILL OVERRIDE THE MACHINERY PROVISIONS OF SECTION 206AA. 32. IN THE CASE OF BOSCH LIMITED (SUPRA) RELIED UP ON BY THE ID. CIT(D.R.) IN SUPPORT OF THE REVENUE'S CASE, THE ISSUE RELATING T O THE APPLICABILITY OF SECTION 206AA HAD COME UP FOR CONSIDERATION BEFORE THE BANGALORE BENC H OF THIS TRIBUNAL IN TWO CONTEXTS. FIRST, IT WAS CONSIDERED IN THE CONTEXT OF GROSSING UP AND WHILE DECIDING THE SAME, IT WAS HELD BY THE TRIBUNAL THAT THE VERY NATURE OF RELEVA NT INCOME BEING BUSINESS INCOME NOT CHARGEABLE TO TAX IN THE HANDS OF THE NONRESIDENT RECIPIENTS HAVING NO PERMANENT ESTABLISHMENT IN INDIA, THE PAYMENTS DID NOT REQUIR E WITHHOLDING OF TAX AT SOURCE UNDER SECTION 195 OF THE ACT AND THE ASSESSEE WAS NOT UND ER AN OBLIGATION TO WITHHOLD TAX EVEN AS PER THE PROVISIONS OF SECTION 206AA AT HIGHER RA TE OF 20%. IN OTHER CONTEXT THE AMOUNT PAID TO THE NONRESIDENT WAS FOUND BY THE TR IBUNAL TO BE IN THE NATURE OF FEES FOR TECHNICAL SERVICES CHARGEABLE TO TAX IN THE HANDS O F THE NONRESIDENT IN INDIA AND SINCE THERE WAS A FAILURE ON THE PART OF THE CONCERNED NO NRESIDENT TO FURNISH PAN TO THE ASSESSEE, THE ASSESSEE WAS HELD TO BE LIABLE TO WIT HHOLD TAX AT HIGHER OF RATES PRESCRIBED IN SECTION 206AA BY THE TRIBUNAL. IT, HOWEVER, APPE ARS THAT ALL THE RELEVANT ASPECTS AS DISCUSSED ABOVE, SUCH AS OVERRIDING EFFECT OF THE T REATY PROVISIONS AS PER SECTION 90(2), THE LIMITED EFFECT OF NONOBSTANTE CLAUSE CONTAINED IN THE MACHINERY PROVISION OF SECTION 206AA ETC. WERE NOT ARGUED BEFORE THE TRIBUNAL ON B EHALF OF THE ASSESSEE AND THE TRIBUNAL, THEREFORE, HAD NO OCCASION TO CONSIDER TH E SAME WHILE DECIDING THIS ISSUE. ON THE OTHER HAND, PUNE BENCH OF ITAT IN THE CASE OF S ERUM INSTITUTE OF INDIA LIMITED (SUPRA) HAS CONSIDERED SOME OF THESE RELEVANT ASPEC TS AND AFTER CONSIDERING THE PROPOSITIONS PROPOUNDED BY THE HON'BLE SUPREME COUR T IN THE CASE OF AZADI BACHAO ANDOLAN & ANOTHER (SUPRA), ELI LILLY AND CO. (INDIA ) P. LIMITED (SUPRA) AND G.E. TECHNOLOGY CENTRE (P) LIMITED (SUPRA), IT WAS HELD BY THE TRIBUNAL, AND IN OUR OPINION, RIGHTLY SO, THAT SECTION 206AA OF THE ACT CANNOT OV ERRIDE THE PROVISIONS OF SECTION 90(2) OF THE ACT. 33. IN VIEW OF THE ABOVE DISCUSSION, WE ARE OF THE VIEW THAT THE PROVISIONS OF SECTION 206AA OF THE ACT WILL NOT HAVE A OVERRIDING EFFECT FOR ALL OTHER PROVISIONS OF THE ACT AND THE PROVISIONS OF THE TREATY TO THE EXTENT THEY ARE BENEFICIAL TO THE ASSESSEE WILL OVERRIDE SECTION 206AA BY VIRTUE OF SECTION 90(2). IN OUR OPINION, THE ASSESSEE THEREFORE CANNOT BE HELD LIABLE TO DEDUCT TAX AT HIGHER OF TH E RATES PRESCRIBED IN SECTION 206AA IN CASE OF PAYMENTS MADE TO NONRESIDENT PERSONS HAVIN G TAXABLE INCOME IN INDIA IN SPITE OF THEIR FAILURE TO FURNISH THE PERMANENT ACCOUNT N UMBERS. WE, ACCORDINGLY, ANSWER THE QUESTION REFERRED TO THIS SPECIAL BENCH IN THE NEGA TIVE AND IN FAVOUR OF THE ASSESSEE AND ALLOW BOTH THE APPEALS OF THE ASSESSEE FOR A.YS. 20 1112 AND 201213. 14. IN THE PRESENT CASE, WE FIND THAT THE ASSESSEE INITIALLY DEDUCTED TAX AT RS.1,70,910/- I.E @ 10% OF TOTAL PAYMENT OF RS.17,09,099/- MADE TO MR. DANIEL YUL SINN YEUNG UNDER THE HEAD C ONSULTANCY FEES IN PURSUANCE TO ARTICLE 12(4) OF INDO-SINGAPORE DTA A. THE ITO RAISED A DISPUTE OF SHORT DEDUCTION OF TAX AND RAISED A DE MAND BY APPLYING HIGHER RATES OF TAX AT 20% AS CONTEMPLATED U/SEC. 2 06AA OF THE ACT, WHICH WAS CHALLENGED BEFORE THE CIT-A CONTENDING THAT THE SERVICES OFFERED BY THE NON-RESIDENT DOES NOT FALL UNDER THE HEAD FEES FOR TECHNICAL SERVICES AND BY MISTAKE THE ASSESSEE DED UCTED THE TDS @ 10% AND CLAIMED DTAA PROVISION SHALL HAVE OVERRIDIN G EFFECT ON THE PROVISIONS OF SECTION 206AA OF THE ACT. WE FIND THA T THE FACTS IN THE PRESENT CASE ARE SIMILAR TO THE FACTS OF THE CASE B EFORE SPECIAL BENCH SUPRA AND THE PRINCIPLE LAID DOWN THEREIN IS APPLICABLE TO THE PRESENT 8 ITA NOS. 384 TO 389/KOL/16 FACTS AND CIRCUMSTANCES OF THE CASE. THEREFORE, THE INTIMATION DT. 19- 11-2012 ISSUED U/S. 200A OF THE BY THE AO AND CONFI RMED THE CIT-A IS SET ASIDE. 15. COMING TO OTHER APPEALS I.E ITA NOS. 385, 386, 387, 388 & 389/KOL/2016, WE FIND THAT THE ISSUES RAISED THEREI N ARE SIMILAR TO THE ISSUES RAISED IN ITA NO. 384/KOL/2016 EXCEPT IN VAR IANCE OF SHORT DEDUCTION OF AMOUNTS AND RELEVANT FINANCIAL QUARTER S. IN VIEW OF OUR VIEW IN THE AFOREMENTIONED APPEAL, WE ADOPT THE SAM E VIEW IN THE REST OF THE APPEALS OF THE ASSESSEE. THEREFORE, TH E GROUNDS RAISED BY THE ASSESSEE IN ALL THE APPEALS FOR THE A.YS UNDER CONSIDERATION THEREIN ARE ALLOWED. 16. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13-0 9-2017 SD/- SD/- J. SUDHAKAR REDDY S.S. VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 13-09-2017 PP(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT/ASSESSEE: M/S. SREI ALTERNATIVE INVESTMEN T MANAGERS LIMITED (FORMERLY SREI VENTRUE CAPITAL LIMITED),M/S . SREI INFRASTRUCTURE FINANCE LIMITED,86C, VISWAKARMA, TOPSIA ROAD (SOUTH ), TOPSIA, KOLKATA-46. 2 RESPONDENT/DEPARTMENT: INCOME TAX OFFICER (INTERNAT IONAL TAXATION), WARD 2(1), ROOM NO. 215, 2 ND FLOOR, AAYKAR BHAVAN POORVA, 110 SHANTIPALLY, KOLKATA-700107. 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, SR.PS/H.O.O ITAT KOLKATA