Case Law (SC) -- High Court has held that provision of DTAA shall override against to provisions of section 206AA. As per the relevant 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. -- SLP dismissed, however, the question of law is kept open.

SLP(C) No. 28700/2024, Dated 05.08.2024 

Holding of High Court in case of CIT(IT) v. WIPRO LTD, ITA No. 181 of 2019 dated 29.11.2022

"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 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.

11. In view of the above, these appeals fail and they are accordingly, dismissed."

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