TMI Blog2010 (5) TMI 638X X X X Extracts X X X X X X X X Extracts X X X X ..... directed against the order of the learned Commissioner of Income-tax (Appeals) dated September 24, 2009 and pertains to the assessment year 2006-07. 2. The issue raised is that the learned Commissioner of Income-tax (Appeals) erred in directing the Assessing Officer to treat receipts as business income as against the treatment given by the Assessing Officer as salary income. 3. In this case return of income was filed by the assessee on October 30, 2006 declaring an income of Rs. 25,15,115. The case was selected for scrutiny. The Assessing Officer observed that the assessee has showed business income to the tune of Rs. 22,73,529 and had shown the business of computer training and maintenance. From the details furnished in respect of the receipts it was observed that the assessee was working only for Bhartiya Vidya Bhavan. From the perusal of agreement the Assessing Officer opined that there exists an employer-employee relationship between Bhartiya Vidya Bhavan and the assessee. 4. The assessee explained that the assessee had 21 contracts in which there was legal obligation to set up and run the computer centre and incurred expenditure on courses/administration and another cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lained that the assessee was a contractor carrying on the business of setting up, running and administering the computer training centres in 19 cities in India. The assessee has entered into several contracts with Bharatiya Vidya Bhavan for conduct of computer training courses and running of computer training centres. The assessee also filed various submissions and also filed petition under rule 46A. These were sent to the Assessing Officer and remand report was obtained. The Assessing Officer had objected to the additional evidence being filed by the assessee. The learned Commissioner of Income-tax (Appeals) found that additional evidence was admissible. 6. The learned Commissioner of Income-tax (Appeals) observed that in his letter No. 64, dated June 8, 2009 that the Assessing Officer had been directed to make the enquiries with Bhariya Vidya Bhavan. In the remand report the Assessing Officer had enclosed a letter from Bhariya Vidya Bhavan which was dated August 11, 2009 at point No. (b), it has been stated by them that "Bhartiya Vidya Bhavan, Delhi Kendra has been making payments for training charges on behalf of Bhartiya Vidya Bhavan's Gandhi Institute, Mumbai and the same ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out his instructions ; (iii) A servant is under more complete control than an agent ; (iv) Generally, a servant is a person who not only receives instructions from his master but is subject to his master's right to control instructions but is generally free to carry out those instructions according to his own direction ; (v) Generally a servant qua servant has no authority to make contracts on behalf of his principal ; (vi) Generally an agent is paid commission upon affecting the result which he has been instructed by his principal to achieve ; (vii) Generally a servant is paid wages or salary." 10. The learned Commissioner of Income-tax (Appeals) further held as under: "Perusal of the agreements which have been perused by me, does not reflect that the assessee is in total control of Bhartiya Vidya Bhavan. Contracts reveal that the relationship was principal to principal. He has the freedom to employ the instructors. Only the minimum quality was as per the prescription of Bhartiya Vidya Bhavan was to be ensured. Further, all legal liabilities pertaining to the employees were to be met by the assessee. This was conducted by the assessee in a controlled atmosphere, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rious aspects of the job including screening the application, proper aptitude test, etc. For this Assessing Officer observed that the assessee was even reimbursed Re. 1 per application received and Rs. 15 per candidate for conducting aptitude test. Certain other expenses like cost of books, magazines, telephone, etc., were reimbursed by BVB. The Assessing Officer went on to conclude that the assessee was an employee of BVB and was receiving salary. However, he further opined that the assessee was liable to keep an average of 3 junior instructors and one senior instructor at each centre and the payment received by the assessee is inclusive of payment of these instructors. Hence, the Assessing Officer proceeded to disallow the various other payments to junior instructors and senior instructor incurred by the assessee and also the administrative expenses. Here we find that as against the total income of Rs. 1,18,18,681 the Assessing Officer has allowed payment to 60 junior instructors (average of 3 centres) amounting to Rs. 16,94,927 ; 20 senior instructors (1 at centre) amounting to Rs. 18,45,589 and has held that the resultant figure was net salary of Rs. 82,74,165 assessable in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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