Ita/181/2019 Of The Commissioner Of Income Tax v. M/S Wipro Ltd

Digitally signed byVIJAYA PLocation: HIGHCOURT OFKARNATAKA ITA No. 181 of 2019 C/W ITA No. 182 of 2019 ITA No. 183 of 2019 ITA No. 184 of 2019 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 29 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. 181 OF 2019 C/WINCOME TAX APPEAL NO. 182 OF 2019INCOME TAX APPEAL NO. 183 OF 2019INCOME TAX APPEAL NO. 184 OF 2019 BETWEEN: 1. THE COMMISSIONER OF INCOME-TAX INTERNATIONAL TAXATION 7 FLOOR, BMTC BUILDING 80 FEET ROAD, KORMANAGALA BENGALURU - 560 095. INTERNATIONAL TAXATION 7 FLOOR, BMTC BUILDING 80 FEET ROAD, KORMANAGALA BENGALURU - 560 095. 2. THE INCOME-TAX OFFICER INTERNATIONAL TAXATION WARD-1(3), 4 FLOOR, BMTC BUILDING 80 FEET ROAD, KORMANAGALA BENGALURU - 560 095. INTERNATIONAL TAXATION WARD-1(3), 4 FLOOR, BMTC BUILDING 80 FEET ROAD, KORMANAGALA BENGALURU - 560 095. … COMMON APPELLANTS (BY SRI. ARAVIND K.V., STANDING COUNSEL) AND: 1. M/S WIPRO LTD DODDAKANNELLI, SARJAPUR ROAD, DODDAKANNELLI, SARJAPUR ROAD, BENGALURU - 560 025 PAN: AACW 0387R … COMMON RESPONDENT (BY SRI. R B KRISHNA, ADVOCATE) ITA No. 181 of 2019 C/W ITA No. 182 of 2019 ITA No. 183 of 2019 ITA No. 184 of 2019 INCOME TAX APPEAL NO.181/2019 IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 12/02/2016 PASSED IN ITA NO.1544/BANG/2013, FOR THE ASSESSMENT YEAR 2011-2012. PRAYING TO: 1. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE; ABOVE; 2. ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO.1544/BANG/2013 DATED 12/02/2016 FOR ASSESSMENT YEAR 2011-2012 ANNEXURE-C AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER PASSED BY THE INCOME TAX OFFICER, INTERNATIONAL TAXATION, WARD-1(3), BENGALURU. THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO.1544/BANG/2013 DATED 12/02/2016 FOR ASSESSMENT YEAR 2011-2012 ANNEXURE-C AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER PASSED BY THE INCOME TAX OFFICER, INTERNATIONAL TAXATION, WARD-1(3), 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. COURT DEEMS FIT TO GRANT IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN THE INTEREST OF JUSTICE AND EQUITY. INCOME TAX APPEAL NO.182/2019 IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 12/02/2016 PASSED IN ITA NO.1545/BANG/2013, FOR THE ASSESSMENT YEAR 2011-2012. PRAYING TO: 1. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE; ABOVE; 2. ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO.1545/BANG/2013 DATED 12/02/2016 FOR ASSESSMENT YEAR 2011-2012 ANNEXURE-C AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER PASSED BY THE INCOME TAX OFFICER, INTERNATIONAL TAXATION, WARD-1(3), BENGALURU. THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO.1545/BANG/2013 DATED 12/02/2016 FOR ASSESSMENT YEAR 2011-2012 ANNEXURE-C AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER PASSED BY THE INCOME TAX OFFICER, INTERNATIONAL TAXATION, WARD-1(3), 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. COURT DEEMS FIT TO GRANT IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN THE INTEREST OF JUSTICE AND EQUITY. ITA No. 181 of 2019 C/W ITA No. 182 of 2019 ITA No. 183 of 2019 ITA No. 184 of 2019 INCOME TAX APPEAL NO.183/2019 IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 12/02/2016 PASSED IN ITA NO.1546/BANG/2013, FOR THE ASSESSMENT YEAR 2011-2012. PRAYING TO: 1. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE; ABOVE; 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. COURT DEEMS FIT TO GRANT IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN THE INTEREST OF JUSTICE AND EQUITY. ITA No. 181 of 2019 C/W ITA No. 182 of 2019 ITA No. 183 of 2019 ITA No. 184 of 2019 INCOME TAX APPEAL NO.183/2019 IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 12/02/2016 PASSED IN ITA NO.1546/BANG/2013, FOR THE ASSESSMENT YEAR 2011-2012. PRAYING TO: 1. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE; ABOVE; 2. ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO. 1546/BANG/2013 DATED 12/02/2016 FOR ASSESSMENT YEAR 2011-2012 ANNEXURE-C AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER PASSED BY THE INCOME TAX OFFICER, INTERNATIONAL TAXATION, WARD-1(3), BENGALURU. THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO. 1546/BANG/2013 DATED 12/02/2016 FOR ASSESSMENT YEAR 2011-2012 ANNEXURE-C AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER PASSED BY THE INCOME TAX OFFICER, INTERNATIONAL TAXATION, WARD-1(3), 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. COURT DEEMS FIT TO GRANT IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN THE INTEREST OF JUSTICE AND EQUITY. INCOME TAX APPEAL NO.184/2019 IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 12/02/2016 PASSED IN ITA NO.1547/BANG/2013, FOR THE ASSESSMENT YEAR 2011-2012. PRAYING TO: 1. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE; ABOVE; 2. ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO. 1547/BANG/2013 DATED 12/02/2016 FOR ASSESSMENT YEAR 2011-2012 ANNEXURE-C AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER PASSED BY THE INCOME TAX OFFICER, INTERNATIONAL TAXATION, WARD-1(3), BENGALURU. THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO. 1547/BANG/2013 DATED 12/02/2016 FOR ASSESSMENT YEAR 2011-2012 ANNEXURE-C AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER PASSED BY THE INCOME TAX OFFICER, INTERNATIONAL TAXATION, WARD-1(3), 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. COURT DEEMS FIT TO GRANT IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN THE INTEREST OF JUSTICE AND EQUITY. THESE APPEALS COMING ON FOR ORDERS THIS DAY, P.S. DINESH KUMAR J., DELIVERED THE FOLLOWING: ITA No. 181 of 2019 C/W ITA No. 182 of 2019 ITA No. 183 of 2019 ITA No. 184 of 2019 JUDGMENT These appeals by the Revenue challenging the common order dated 12.02.2016 passed in S.P.Nos. 175 to 178/Bang/2013 (in I.T.(I.T.)A.Nos. 1544 to 1547/Bang/2013) (Assessment year: 2011-12), have been admitted to consider following substantial question of law: "Whether on the facts and in the circumstances of the case and in law, the Tribunal is right in law holding that the TDS provisions in the Act has to be read along with DTAA for computing the tax liability on the sum in question and therefore when the recipient is eligible for benefit of DTAA then there is no scope for deduction of tax @ 20% under Section 206AA of the Act when the assessing authority has rightly invoked said provision as conditions set out in said provisions are satisfied in case of assessee? 3. At the outset, Shri. R.B.Krishna, learned advocate for the respondent submitted that the assessee has paid fee for technical services to various entities in the four quarters during the assessment year 2011-12. He contended that the Tax Deducted at Source shall be in terms of the relevant Article in ITA No. 181 of 2019 C/W ITA No. 182 of 2019 ITA No. 183 of 2019 ITA No. 184 of 2019 3. At the outset, Shri. R.B.Krishna, learned advocate for the respondent submitted that the assessee has paid fee for technical services to various entities in the four quarters during the assessment year 2011-12. He contended that the Tax Deducted at Source shall be in terms of the relevant Article in ITA No. 181 of 2019 C/W ITA No. 182 of 2019 ITA No. 183 of 2019 ITA No. 184 of 2019 respective agreements for Avoidance of Double Taxation in various countries. Adverting to one such agreement with Germany, annexed with the written submission, he pointed out that the rate of tax shall not exceed 10% in the case of Germany. 4. Placing reliance on the case of Danisco India Pvt. Ltd., Vs. Union of India and Others[1], Shri. Krishna, submitted that Double Taxation Avoidance Agreement (for short 'DTAA') has overriding effect and any subsequent amendment to nullify the effect of provision prior to the amendment has been read down by the Delhi High Court, whereas the Assessing Officer has applied provision of Section 200-A of the Income Tax Act (for short 'the Act') and has raised a demand for the remaining 10%. In substance, he submitted that the issue is covered by the decision in the case of Danisco (Supra) against the revenue. ITA No. 181 of 2019 C/W ITA No. 182 of 2019 ITA No. 183 of 2019 ITA No. 184 of 2019 5. Shri. Aravind, learned Standing Counsel for the Revenue adverting to Section 206-AA of the Act submitted that every payee is required to furnish a Permanent Account Number and in the absence of the same, the rate of tax applicable shall be 20% in terms of Section 206-AA(1)(iii). He argued that admittedly PAN numbers have not been furnished. Therefore, the authority in Danisco is not applicable to the facts of this case. 6. We have carefully perused the rival contentions and perused the records. 7. It is not in dispute that the assessee has made payment towards technical services to various recipients in different countries as per DTAA with different countries. In the case of Danisco, the Delhi High Court has held that Section 206AA cannot be understood to override the charging Sections 4 and 5 of the Act. It has further held that the provision in Section 206-AA has to be read down to mean that where the deductee i.e., the overseas resident business concern conducts ITA No. 181 of 2019 C/W ITA No. 182 of 2019 ITA No. 183 of 2019 ITA No. 184 of 2019 its operation from a territory, whose Government has entered into a Double Taxation Avoidance Agreement with India, the rate of taxation would be as dictated by the provisions of the treaty. 8. Thus, we are in respectful agreement with the view taken by the Delhi high Court. As per the DTAA, the maximum deduction shall not exceed 10% which the assessee has deducted. Any other interpretation to permit the taxing authority to raise a demand beyond 10% would be incongruous. 9. Shri Aravind, also contended that if the law laid down in Danisco is to be applied, Section 206-AA of the Act would be rendered redundant. 10. In our view, such contention is untenable in the facts of this case because there exists DTAA and tax deduction has been made at source as mandated by the said agreement. ITA No. 181 of 2019 C/W ITA No. 182 of 2019 ITA No. 183 of 2019 ITA No. 184 of 2019 11. In view of the above, these appeals fail and they are accordingly, dismissed. The question of law is answered in favour of the assessee and against the revenue. No costs. In view of the disposal of the appeals, all pending interlocutory applications stand disposed of. Sd/- JUDGE Sd/- JUDGE VP