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

ITA 1974/AHD/2015 | 2014-2015
Pronouncement Date: 30-09-2016 | Result: Allowed

Appeal Details

RSA Number 197420514 RSA 2015
Assessee PAN AABCU0216A
Bench Ahmedabad
Appeal Number ITA 1974/AHD/2015
Duration Of Justice 1 year(s) 2 month(s) 27 day(s)
Appellant Uniphos Envirotronic Pvt. Ltd., Valsad
Respondent The Dy.CIT, CPC- TDS,, Gaziabad
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted I
Tribunal Order Date 30-09-2016
Date Of Final Hearing 31-08-2016
Next Hearing Date 31-08-2016
Assessment Year 2014-2015
Appeal Filed On 03-07-2015
Judgment Text
I.T.A. NO.1974 /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 . 1974/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: 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 I.T.A. NO.1974 /AHD/201 5 ASSESSMENT YEAR : 2014 - 15 PAGE 2 OF 3 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 APPR ECIATING 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 ] TO ADJUDICATE ON THIS APPEAL ONLY A FEW MATERIAL FACTS NEED TO BE TAKEN NOTE OF . THE ASSESSEE HAS MADE A REMITTANCE TO A GERMAN TAX RESIDENT AND IN ACCORDANCE WITH THE PROVISIONS OF THE INDO GERMAN DOUBLE TAXATION AVOIDANCE AGREEMENT THE PAYMENT SO MADE BY THE ASSESSEE IS TAXABLE @10% ON GROSS BASIS IN THE HANDS OF THE GERMAN ENTI TY. THERE IS NO DISPUTE ON THESE ASPECTS. ACCORDINGLY THE ASSESSEE DEDUCTED TAX AT SOURCE @ 10% UNDER SECTION 195 AND MADE REMITTANCE OF THE NET AMOUNT ACCORDINGLY. HOWEVER WHEN THE RELATED TDS RETURN WAS PROCESSED UNDER SECTION 200A A SHORT DEDUCTION D EMAND WAS RAISED ON THE GROUND THAT THE TAX WITHHOLDING RATE WAS TO APPLY @ 20% IN TERMS OF THE PROVISIONS OF SECTION 206AA AS THE GERMAN ENTITY HAD NOT OBTAINED THE PERMANENT ACCOUNT NUMBER (PAN) FROM THE INDIAN TAX AUTHORITIES. THE ASSESSEE OBJECTED T O THIS TREATMENT AND FILED A RECTIFICATION PETITION. NOT SUCCESSFUL THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. LEARNED CIT(A) RELYING UPON THE PRESS RELEASE DATED 20 TH JANUARY 2010 ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES HELD THAT IN TERMS OF THE PROVISIONS OF SECTION 206AA IN A CASE IN WHICH THE RECIPIENT FOREIGN ENTITY HAS NOT OBTAINED PAN FROM THE INDIAN TAX AUTHORITIES THE TAX WILL BE DEDUCTED AT A HIGHER RATE OF 20%. THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE US. [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. I.T.A. NO.1974 /AHD/201 5 ASSESSMENT YEAR : 2014 - 15 PAGE 3 OF 3 [4] IT IS ONLY ELEMENTARY THAT UNDER THE SCHEME OF THE INCOME TA X 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 APPLIC ABLE 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 OBTAI N 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 SERV ICE 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 DEDU CTION OF TAX AT SOURCE DEMAND. THE GRIEVANCE OF THE ASSESSEE IS INDEED JUSTIFIED MERITS ACCEPTANCE AND IS HEREBY UPHELD. [5] IN THE RESULT THE 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