Allowing the petition the Court held that ;The requirement (pre amendment) that TDS should be deducted at 20% on payments to non-residents even though the income is chargeable to tax at a lower rate under the DTAA is not acceptable because the DTAA has primacy over the Act. S. 206AA (as it existed) has to be read down to mean that where the non-resident payee is resident in a territory with which India has a Double Taxation Avoidance Agreement, the rate of taxation would be as dictated by the provisions of the treaty. ( WP .No. 5908/2015, dt. 05.02.2018)
Danisco India Private Ltd. v. UOI ( 2018) 404 ITR 539/ 163 DTR 212/ 301 CTR 360/ 253 Taxman 500 (Delhi)(HC)
S.206AA: Requirement to furnish Permanent Account Number – where the non-resident payee is resident in a territory with which India has a Double Taxation Avoidance Agreement, the rate of taxation would be as dictated by the provisions of the treaty-DTAA-India- Singapore [ S.4, 5, 90, Art .12 ]