ITAT approves assessee’s action of deducting tax at source as per rate specified u/s 115A while making payment to non-resident parties, rejects Revenue’s applicability of Sec 206AA (providing for higher TDS @ 20% absent PAN)

ITAT approves assessee’s action of deducting tax at source as per rate specified u/s 115A while making payment to non-resident parties, rejects Revenue’s applicability of Sec 206AA (providing for higher TDS @ 20% absent PAN); Holds Sec 206AA cannot be applied when the benefit of DTAA
is available, follows Pune ITAT ruling in Serum Institute of India Ltd. and co-ordinate bench ruling in Bosch Ltd. and relies on ratio of Karnataka HC ruling in Bharti Airtel Ltd.; Also, quashes AO’s action of making adjustment and raising the consequential demand by applying 20% TDS rate by issuing the intimation u/s 200A (which provides for processing TDS statements by making adjustments of any arithmetical error or incorrect claim apparent from the statement); Further rejects Revenue reliance on explanation to Sec 200A (1) which clarifies that where TDS rate is not in accordance with provisions of the Act, the same can be considered as an incorrect claim apparent from the statement; Holds the issue of applying 20% rate as per Sec 206AA requires a long drawn reasoning and finding, hence it does not fall in the category of any arithmetical error or incorrect claim, concludes that “applying the rate of 20% without considering the provisions of DTAA and consequent adjustment while framing the intimation u/s 200A was beyond the scope of the said provision.”  : Bangalore ITAT