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2019 (4) TMI 1371 - AT - Income TaxPenalty under section 271C - TDS u/s 194H not deducted - allegation that assessee has paid commission to M/s AD Educational & Research for services provided in respect of procurement of students - expert services of the service provider to run certain academic courses of study under distance education mode - sharing of revenue - HELD THAT:- There is sharing of revenues by the assessee with the service provider to the extent of 50% of association fees and 20% of course fees. In the MOU, there is reference to scope of services to be rendered by the service provider and prima facie, it gives an impression of rendering of services - through the MOU, there is pooling of academic resources of the University with the marketing resources of the service provider whereby the virtual footprint of the University has been envisaged to be expanded through distance education programmes and setting up of IAACs in close association with the service provider. Looking at the terms of the MOU whereby the assessee has agreed to share fees as high as 50% of association fees and 20% of course fees with the service provider, the said payment seems to be more in the nature of revenue sharing rather than payment of commission for services rendered by the service provider. Therefore, it cannot be held conclusively that such payments would surely fall in the definition of commission so defined in section 194H It is clearly a debatable issue and on such issue, levy of penalty for non- deduction of TDS cannot be justified. Therefore, the explanation of the assessee that it was under a bonafide belief that such payments doesn’t call for TDS thus cannot be disputed. It is also noted that subsequent to TDS verification by the Department when such matter was pointed out to the assessee, the latter has complied with the same by depositing appropriate TDS along with interest. As held by the Hon’ble Supreme Court in case of Nova Scotia [2016 (1) TMI 583 - SUPREME COURT] , for levy of penalty u/s 271-C what is necessary is to establish that there was contumacious conduct on the part of the assessee which, we find, is not present in the case of the assessee. In light of above discussions and keeping in view the provisions of section 273B of the Act, the penalty so levied u/s 271C is hereby directed to be deleted. - Decided in favour of assessee.
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