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9.1 Assuming without admitting that the payments made to overseas subsidiary were chargeable to tax in India, the learned CIT(A) has erred in concluding that the said payments are liable for TDS at the rate of20% as per section 206AA of the IT Act, 1961 9.2 The learned CIT(A) has erred in not appreciating that

(i) Overseas subsidiary was not required to obtain PAN under the provisions of the Income tax Act, 1961 and consequently there was no requirement to furnish its PAN under section 206AA;

IT(IT)A Nos.4 & 1182 /Bang/2014.

M/s.Infosys Limited.

(ii) Section 206AA does not override the Double Taxation Avoidance Agreements an or section 90 of the Income tax Act;

(iii) in any case, the TDS rate as per section 206AA cannot exceed the rate at which the income is chargeable to tax in the hands of non-resident.

9.3 In any case and without prejudice, despite having called for and obtained the PAN of overseas subsidiary during the appellate proceedings, the learned CIT(A) erred in concluding that the impugned payments were liable for TDS at 20% under section 206AA of the IT Act, 1961.

 Ground No 9.1 to 9.3 before the Tribunal challenges the applicability of section 206AA.

 DTAA overrides section 206AA - Decisions relied on -

Nagarjuna Fertilizers and Chemicals Ltd v ACIT [2017] 78 taxmann.com 264 (Para 33) Hyderabad Special bench.

 Danisco India P Ltd v UOl [2018] 90 taxmann.com 295 (Delhi). Thus, assuming without admitting that the TDS is applicable on sub contracting charges paid to Infosys China, the rate of TDS should be considered as 10% as per the India - China DT AA and not at 20% as per section 206AA.

M/s.Infosys Limited.

27.09.2013. However, the CIT(A) did not allow any relief on this issue.

9.9 We have heard rival submissions and perused the material on record. The relevant ground with regard to the above issue are grounds 9.1 to 9.3. The Special Bench of the Tribunal in the case of Nagarjuna Fertilizders and Chemicals Ltd. v. ACIT reported in (2017) 78 taxmann.com 264 had held if rate of tax applicable under DTAA is lower than 20% tax rate prescribed u/s 206AA of the Act, TDS has to be deducted at such lower rate even if non-resident deductee fails to furnish its PAN. Further, the Hon'ble Delhi High Court in the case of Danisco India P. Ltd. v. UOI reported in (2018) 90 taxmann.com 295 (Delhi) had held that provisions of DTAA override section 206AA of the Act. In view of the above cited judicial pronouncements, we hold that the applicable TDS on subcontracting charges paid to Infosys China should be considered at 10% as per the India-China DTAA instead of 20% as per section 206AA of the I.T.Act. It is also to be noted that while passing the order u/s 201(1) and 201(1A) of the Act for assessment year 2012-2013, the Assessing Officer has calculated TDS liability at 10% as per the Indo-China DTAA. Therefore, ground 9.1 to 9.3 is allowed.