By Jagdish D. Shah, Jagdish T. Punjabi, Chartered Accountants
Sections 115A(1)(b), 206AA – Provisions of
section 206AA cannot be invoked in a case where the payment has been made to
deductees, not having PAN, on the strength of beneficial provisions of section
115A(1)(b).
FACTS
The assessee company, engaged in the
business of chartering, hiring and leasing aircraft made payment of fees for
technical services to a non-resident viz. M/s Honeywell, USA, not having
PAN. Tax was deducted at source @ 10%
plus applicable surcharge and cess as per provisions of section 115A of the
Act. The Assessing Officer (AO) alleged
that tax was required to be deducted @ 20% in view of the provisions of section
206AA of the Act as the assessee was not having PAN and accordingly raised
demand of Rs. 30,250 towards short deduction and Rs. 5,750 towards interest on
short deduction.
Aggrieved, the assessee preferred an appeal
to CIT(A) who confirmed the action of the AO.
Aggrieved, the assessee preferred an appeal
to the Tribunal.
HELD
The Tribunal noted that similar issue on
almost identical facts came up before the co-ordinate Bench in the case of Alembic
Ltd. vs. ITO (ITA No. 1202/Ahd/2014) wherein the co-ordinate Bench observed
that the issue is squarely covered by the decisions of Uniphos Envirotronic
Pvt. Ltd. vs. DCIT (ITA No. 1974/Ahd/2015
for AY 2014-15) and the decision of Pune Bench of the Tribunal in the
case of DCIT vs. Serum Institute of India Ltd. and decided the appeal in
favor of the assessee. The Bench has in
the case of Alembic Ltd. (supra) held that in case where payments have
been made to the deductees on the strength of the beneficial provisions of
section 115A(1)(b) of the Act or as per DTAA rates r.w.s. 90(2) of the Act,
then provisions of section 206AA cannot be invoked by the AO insisting to
deduct tax @ 20% for non-availability of PAN.
The Tribunal following the decision of the
co-ordinate Bench in the case of Alembic Ltd. (supra) held that in the
present case as well, payment was made towards fees for technical services to a
non-resident through banking channel as approved by RBI and payment is well
covered u/s. 115A(1)(b) of the Act and therefore, special rate of TDS i.e.
11.33% was applicable and was rightly deducted and deposited by the assessee
and the provisions of section 206AA of the Act cannot be made applicable to
this payment. The Tribunal set aside the
order of CIT(A) and deleted the claim of Rs. 30,250 towards short deduction.
The Tribunal allowed the appeal filed by the
assessee.
