The reason for this transcendence is that the ChaBaD of Asiyah of the state of neshamah is the source of life of ChaBaD of nefesh-ruach

וְהַטַּעַם, מִשּׁוּם דְּחָכְמָה־בִּינָה־דַּעַת דַּעֲשִׂיָּה דִּבְחִינַת נְשָׁמָה הוּא מְקוֹר הַחַיּוּת דְּחָכְמָה־בִּינָה־דַּעַת דְּנֶפֶשׁ־רוּחַ

and their offspring, and their coming into being ex nihilo with their offspring, unto the ultimate stage of Asiyah, namely the earth and all its hosts.

וְתוֹלְדוֹתֵיהֶן, וְהִתְהַוּוּתָן מֵאַיִן לְיֵשׁ עִם תּוֹלְדוֹתֵיהֶן, עַד סוֹף הָעֲשִׂיָּה, הִיא הָאָרֶץ וְכָל צְבָאָהּ.

The ChaBaD of Asiyah (in the state of neshamah) is thus a source for created beings.

However, as to the ChaBaD of the laws with their rationales that are in malchut of Beriah and Yetzirah,

אֲבָל חָכְמָה־בִּינָה־דַּעַת דַּהֲלָכוֹת בְּטַעֲמֵיהֶן שֶׁבְּמַלְכוּת דִּבְרִיאָה וִיצִירָה,

This level of ChaBaD is not a source of created beings; rather:

the function of the chochmah [within them] is the rectification of the visages of Atzilut,

עִנְיַן הַחָכְמָה – הִיא בְּתִיקּוּן פַּרְצוּפֵי הָאֲצִילוּת,

upon which are dependent all the rationales of the commandments—

שֶׁבָּהֶן תְּלוּיִן כָּל טַעֲמֵי הַמִּצְוֹת,

[the rationales of] the positive commandments [depend] on the Five Attributes of Kindness of za of Atzilut and [the rationales of] the prohibitions in the Five Attributes of Severity of za of Atzilut.

מִצְוֹת עֲשֵׂה – בְּה' חֲסָדִים, וּמִצְוֹת לֹא תַעֲשֶׂה – בְּה' גְּבוּרוֹת.

Therefore, even when they descended to be clothed in created beings,

וּמִשּׁוּם הָכֵי נַמֵי, כְּשֶׁיָּרְדוּ לְהִתְלַבֵּשׁ בַּנִּבְרָאִים –

Even when the rationales for the laws, that essentially derive from visages of Atzilut, descended to become rationales for laws for created beings—

they are in malchut of Beriah and Yetzirah of the specific [G-dly] state of neshamah, which is of the vessels of Atzilut—for the thirty vessels of z’eyr anpin and nukva of Atzilut become a neshamah for Beriah, Yetzirah, and Asiyah

הֵן בְּמַלְכוּת דִּבְרִיאָה־וִיצִירָה דִּבְחִינַת נְשָׁמָה דַוְקָא, שֶׁהוּא מִכֵּלִים דַּאֲצִילוּת,

and not of the degree of ruach and nefesh; the rationales for the laws did not vest themselves within ruach and nefesh, which are created beings.

וְלֹא בִּבְחִינַת נֶפֶשׁ־רוּחַ.

Now, though ChaBaD of Beriah-Yetzirah of the state of neshamah by far transcend malchut of Beriah-Yetzirah of the state of neshamah, for ChaBaD is the highest of the sefirot of the world while malchut is the lowest,

וְאַף דְּחָכְמָה־בִּינָה־דַּעַת דִּבְרִיאָה־יְצִירָה דִּבְחִינַת נְשָׁמָה, שֶׁגָּבְהָה מְאֹד מַעֲלָתָן עַל בְּחִינַת מַלְכוּת דִּבְרִיאָה יְצִירָה דִּנְשָׁמָה,

still, [the ChaBaD of Beriah and Yetzirah] are the source for ChaBaD of Beriah-Yetzirah of the state of nefesh-ruach, namely the angels.

וְאַף־עַל־פִּי־כֵן הֵן מָקוֹר לְחָכְמָה־בִּינָה־דַּעַת דִּבְרִיאָה־יְצִירָה שֶׁל בְּחִינוֹת נֶפֶשׁ־רוּחַ שֶׁהֵן הַמַּלְאָכִים?

How do we then say that malchut of Beriah and Yetzirah of the state of neshamah cannot descend to become a source for created beings when ChaBaD of Beriah and Yetzirah of the state of neshamah that is far loftier than malchut does serve as a source for created beings?

This is not a question at all.

לֹא קָשֶׁה מִידֵי –

For in truth, the angels and souls that are created of ChaBaD of Beriah and Yetzirah are only of a drop drawn from ChaBaD of the neshamah to the attribute of yesod of za, and then transmitted to nukva, i.e., to malchut,

דְּבֶאֱמֶת הַמַּלְאָכִים וְהַנְּשָׁמוֹת אֵינָן אֶלָּא מִטִּפָּה הַנִּמְשֶׁכֶת מֵחָכְמָה־בִּינָה־דַּעַת דִּנְשָׁמָה לִ"יסוֹד זְעֵיר אַנְפִּין" וְנִיתַּן לְ"נוּקְבָא",

and from there, they (the souls and angels) went forth in a state of “birth”—a new entity resulted.

וּמִשָּׁם יָצְאוּ בִּבְחִינַת "לֵידָה".

Thus, this is not a mere emanation from ChaBaD, as is the case with laws, for such an emanation cannot in fact serve as a source of created beings. Rather, it resembles the drop that brings about a birth. For this reason, it is possible that created beings should result even from ChaBaD of Beriah and Yetzirah.

For even if it is proposed that they are created from the radiance of the vessels of nukva of Atzilut, nevertheless, they themselves descend into Beriah, Yetzirah, and Asiyah and become a neshamah unto them.

כִּי אַף אִם תִּמְצָא לוֹמַר שֶׁנִּבְרְאוּ מֵהֶאָרַת הַכֵּלִים דְּנוּקְבָא דַאֲצִילוּת, הֲרֵי, הֵם הַיּוֹרְדִים וְנַעֲשִׂים נְשָׁמָה.

But the essence of ChaBaD of neshamah extends into the “six directions” of z’eyr anpin and nukva,

אֲבָל עַצְמוּת חָכְמָה־בִּינָה־דַּעַת דִּנְשָׁמָה, מִתְפַּשֵּׁט בְּו' קְצָווֹת דִּזְעֵיר אַנְפִּין וְנוּקְבָא,

and there they are the Six Orders of Mishnah and the Gemara—the laws of the Torah.

וְשָׁם הֵם שִׁיתָּא סִדְרֵי מִשְׁנָה וּגְמָרָא.

The essence of ChaBaD thus descends specifically within the laws of the Torah, which are Divinity. Torah, in turn, descends within the level of neshamah, which is also Divinity.