No higher TDS to be paid for non- furnishing of PAN if DTAA applicable   If assessee do not furnish PAN of non- resident deductee, if eligible for the benefit of DTAA then higher TDS @20% shall not be applicable. Hence no higher TDS to be paid for non- furnishing of PAN if DTAA applicable. Case: Deputy Commissioner of Income Tax vs. Infosys BPO Ltd. Facts: The assessee was engaged in the activity of business process outsourcing (BPO). The assessee made payment to the non-resident on account of royalty in some cases and on account of fee for technical services in some other cases. The assessee deducted TDS at the rate of 10 per cent in some cases and at the rate of 10.56 per cent in some other cases as per the provisions of section 115A(1)(b).   It filed statements of deduction of tax at source in the Form-24Q for various quarters of the financial years 2010-11 and 2012-13 in respect of payments made to non-residents during said period.   During the assessment proceedings, the AO noted short deduction of tax at source and therefore, issued the intimation under section 200A. The tax demand along with interest charged on such short deduction was raised.   The reason provided for the same was that the assessee had not furnished PAN of the non-resident deductee and therefore, as per the provisions of section 206AA, the TDS should have been deducted at the rate of 20 per cent.   Aggrieved by the order, assessee made an appeal. CIT (A) held that the non-resident recipient of the payment was eligible for the benefit of DTAA and therefore, the tax deducted at source could not be more than the tax liability provided under the DTAA.   On this, higher appeal was made.   Held: In the light of the facts of present case, it was highlighted that the benefit of DTAA is available to the recipients of the payments in question. Therefore, the tax liability of the recipients could not be more than the rate prescribed under the DTAA or the Act, whichever is lower. In the case in hand, the AO while issuing the intimation under section 200A, computed the tax liability at the rate of 20 per cent, as provided under section 206AA. Since the benefit of DTAA is available to recipient, in any case, the scope of deduction of tax at source could not be more than the tax liability under DTAA.   As per sub-section (1) of section 200A, it clarifies that in respect of deduction of tax at source where such rate is not in accordance with provisions of the Act, can be considered as an incorrect claim apparent from the statement. However, in the case in hand, it is not a simple case of deduction of tax at source by applying the rate only as per the provisions of Act, when the benefit of DTAA is available to the recipient of the amount in question.   Hence, applying the rate of 20 per cent without considering the provisions of DTAA and consequently issuing the intimation under section 200A was beyond the scope of the said provision.   Therefore, No higher TDS to be paid for non- furnishing of PAN if DTAA applicable. _______________________________________________________________________________