Brief of the Case
ITAT Delhi held In the case of OSRAM India Pvt. Ltd. vs. DCIT that Article 2(1) of the India Singapore tax treaty provides that the taxes covered shall include tax and surcharge thereon. Once it is concluded that education cess is nothing but an additional surcharge, it is clear that the education cess will also be covered by the scope of Article 2. Accordingly, the provisions of Article 11 and 12 must find precedence over the provisions of the Income Tax Act and restrict the taxability, whether in respect of income tax or surcharge or additional surcharge- whatever name called, at the rates specified in the respective article. Hence addition on account of education cess is not sustainable.
Facts of the Case
The AO raised the TDS liability on account of the payments made by the assessee to non-resident @ 10.30% (10% tax + 0.30% on account of education cess & secondary and higher education cess) as against 10% deducted by the assessee.
Contention of the Assessee
The ld counsel of the assessee reiterated the submissions made before the authorities below and further submitted that as per the DTAA, the TDS was to be deducted @ 10% which the assessee rightly deducted therefore, the AO was not justified in raising the demand on the ground that TDS was to be deducted @ 10.30% and the CIT was not justified in upholding the same. The reliance was placed on the following case laws – Sunil V. Motiani vs. ITO, ITA no. 276/Mum/ 2012, order dated 27.02.2013, DIC Asia Pacific Pte. Ltd. vs. ADIT, ITA no. 1458/Ko/.2011, order dated 20.06.2012 and CSC Technology Singapore Pte. Ltd. vs. ADIT, ITA No. 5604/Del/2010 order dated 17.02.2012.
Contention of the Revenue
