Case Law Details
Air India Limited Vs ITO (ITAT Delhi)
Undisputedly, the dispute in the instant appeals is qua applying the TDS rate at 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, the lessor is a foreign company having no Permanent Establishment (PE) and was a tax resident of Neitherland. It is also not in dispute that under Article 7 of Double Taxation Avoidance Agreement (DTAA) between India and Neitherland, the profits of enterprise of a contracting state shall be taxable only in that state unless the enterprise carries on business in the other contracting state through a “permanent establishment” situated therein. It is also not in dispute that engine is a part of aircraft and cannot be said to be an aircraft and the payment being made for rent of engine can be covered under equipment as per section 12(4) of the DTAA between India and Neitherland. It is also not in dispute that assessee has not deducted this TDS from the payment but has deposited from their own account and has absorbed it as cost. It is also not in dispute that since payee, ELFC, being a foreign company having no PAN, the assessee reported the transaction without PAN in the quarterly TDS statements.
Question Raised:
Whether assessee was required to deduct the tax 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 beneficial provisions of DTAA by deducting the tax at source @ 10%?
Held by ITAT
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