Case Law (ITAT) -- If rate of tax applicable under DTAA is lower than 20 per cent tax rate prescribed u/s 206AA, TDS has to be deducted at such lower rate even if non-resident deductee fails to furnish its PAN.

"In view of the various decisions passed by the High Court, the Special Bench of the ITAT [(2017) 55 ITR (Trib) 1] and decisions passed by the Ahmedabad ITAT in various cases on this same issue and also the decision of ITAT Ahmedabad on this issue in favour of the assessee in the assessee’s own case for assessment year 2016-17, we are of the considered view, that Ld. CIT(Appeals) has not erred in facts and in law in holding that in case of payments made to non-residents, the assessee was entitled to deduct taxes at source at the rates applicable in the respective Tax Treaties in case PAN of non-resident payee is not available. In the instant facts, it is not the allegation of the Department that taxes have not been deducted at source by taking recourse to relevant clauses of the Tax Treaty enabling the assessee not to deduct tax at source in respect of payments made to non-resident payees. In the instant facts, the assessee has deducted taxes at the beneficial rate of 10% as applicable in the respective Tax Treaties in respect of all payments made to non-resident payees."

[DCIT (International Taxation) v. Adani Wilmar Ltd; ITA No. 321 to 338/Ahd/2021 dated 20.01.2023]

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