THE COMMISSIONER OF INCOME TAX vs. M/S MANTRI TECHNOLOGY CONSTELLATIONS PVT LTD

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ITA/211/2021HC KarnatakaKAHC01014523202129 November 2022Bench: P.S.DINESH KUMAR,T.G. SHIVASHANKARE GOWDA4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court, following its previous decision in a similar case, held that the Tax Deductible at Source shall not exceed 10% where a Double Taxation Avoidance Agreement exists. The appeal was dismissed.

What were the facts?

The Revenue appealed against an ITAT order that remanded the matter to the first appellate authority. The core issue was whether TDS was required for payments to non-resident entities and the applicable TDS rate under DTAA or the Act.

What were the issues?

The key issues were whether TDS was applicable to payments to non-residents and whether the DTAA overrides Section 206AA of the Income Tax Act regarding TDS rates.

Which sections of the Income-tax Act were involved?

Section 195,Section 206AA,Section 90(2)

AI-generated summary — verify with the full judgment below

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ITA No. 211 of 2021 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 29TH DAY OF NOVEMBER, 2022 PRESENT THE HON'BLE MR JUSTICE P.S.DINESH KUMAR AND THE HON'BLE MR JUSTICE T G SHIVASHANKARE GOWDA INCOME TAX APPEAL NO.211 OF 2021 BETWEEN: 1. THE COMMISSIONER OF INCOME-TAX INTERNATIONAL TAXATION, 4TH FLOOR, BMTC BUILDING, 80 FEET ROAD, KORMANGALA, BENGALURU-560 095. 2. THE DEPUTY COMMISSIONER OF INCOME TAX INTERNATIONAL TAXATION, CIRCLE-1(2) 4TH FLOOR, BMTC BUILDING, 80 FEET ROAD, KORMANGALA, BENGALURU - 560 095. … APPELLANTS (BY SRI. ARAVIND K.V., ADVOCATE) AND: 1. M/S MANTRI TECHNOLOGY CONSTELLATIONS PVT LTD MANTRI HOUSE, 41, VITTAL MALLYA ROAD, BANGALURU - 560 001 PAN: AAFCM 1653 D … RESPONDENT (RESPONDENT - SERVED) Digitally signed by VIJAYA P Location: High Court of Karnataka

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ITA No. 211 of 2021 THIS INCOME TAX APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 24/08/2020 PASSED IN IT(IT)A NO.130/BANG/2018, DATED 24.08.2020 FOR THE ASSESSMENT YEAR 2014-2015 ANNEXURE C, PRAYING TO: 1. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW

STATED ABOVE; 2. ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY

THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN

IT(IT)A NO. 130/BANG/2018 DATED 24/08/2020 FOR

ASSESSMENT YEAR 2014-2015 ANNEXURE-C AND CONFIRM

THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING

THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF

INCOME TAX, INTERNATIONAL TAXATION, CIRCLE-1(2),

BENGALURU. 3. TO PASS SUCH OTHER SUITABLE ORDERS AS THIS HON'BLE

COURT DEEMS FIT TO GRANT IN THE FACTS AND

CIRCUMSTANCES OF THE CASE IN THE INTEREST OF JUSTICE

AND EQUITY.

THIS APPEAL, COMING ON FOR HEARING, THIS DAY, P.S. DINESH KUMAR J., DELIVERED THE FOLLOWING:

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ITA No. 211 of 2021 JUDGMENT This appeal by the Revenue, challenging the order dated 24.08.2020 in IT(ITA) No.130/Bang/2018 (Assessment /year 2014-15) by the ITAT has been admitted to consider the following questions of law. "Whether on the facts and in the circumstances of the case, the Tribunal is right in law in remanding the matter back to the file of first appellate authority by directing the said authority to consider whether TDS is required to be made by assessee in respect of payments made to non- resident entities and if found to be made then rate of TDS has to be rate prescribed under DTAA or Act whichever is lower even though as per Section 195 or Section 206AA nor under Section 90(2) of the Act do not contemplate such restriction? Whether on the facts and circumstances of the case and in law, the Tribunal is justified in holding that the DTAA overrides the provisions of Section 206AA of the Act without appreciating that Section 90(2) of the Act, which confers the right to choose tax rates between Income Tax Act and

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ITA No. 211 of 2021 DTAA is over ridden by provisions of Section 206AA of the Act?"

2.

Shri. K.V. Aravind, learned Standing Counsel for the Revenue submits that the issue involved in this appeal is similar to one in I.T.A.No.181/2019 and connected matters, in which this Court has held that, where there exists Double Taxation Avoidance Agreement, the Tax Deductible at Source shall not exceed 10%.

3.

Accordingly, for the reasons stated in I.T.A.No.181/2019 and connected matters, this appeal also fails and it is dismissed. The question of law is answered in favour of the assessee and against the revenue.

No costs. Sd/- JUDGE Sd/- JUDGE VP

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