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TMI Blog2010 (5) TMI 638X X X X Extracts X X X X X X X X Extracts X X X X ..... g 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 contractual jobs. The assessee received composite payment for the same. Even the loss of education on contract was to be borne by the assessee and not by the Bhavan. It was further explained that the assessee incurred Rs. 81 lakhs on subordinate staff and outside professional and incurred administrative expenses for running and administration of the centres. No supervision, direction and control on day to day actual execution of the contract and no approval of the Bhavan for execution was needed. The assessee selected, employed and distributed the study material to the students. The Assessing Officer did not accept the above contentions. He held that the receipt of the assessee should be treated as salary as employer and employee relationship clearly existed. He concluded as under : "Thus, in vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 are being reimbursed by them and reflected in the accounts of JMD Information Technologies maintained by us. M/s. JMD Information Technologies, New Delhi is a contractor and was till date never an employee of Bhavan's Chandhi Institute's Computer Centers in India. Further, they are also providing computer maintenance services at Bhavan's Delhi Kendra and Mehta Vidalaya. The copies of agreements and bills are enclosed". 7. From the above, the learned Commissioner of Income-tax (Appeals) concluded that it was clear that Bharatiya Vidya Bhavan had confirmed that the assessee was not an employee of theirs. The learned Commissioner of Income-tax (Appeals) further observed that "be that as it may, it is important to see the substance of the transactions to ascertain the relationship between Bhartiya Vid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee 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, which ensured quality. Assuming for a moment, that Bharatiya Vidya Bhavan was itself imparting training, all the instructors would have been there. The said entity would have had to even take care of the legal liabilities, such as provident fund, gratuity, etc., of the instructors. In that case it would not have been a part of the contract also that the assessee was liable to hand out copies of study material. The same would have been given directly by the Bhavan. In view of the confirmation filed by the Bhartiya Vidya Bhavan and the contents of the contract(s), it cannot be concluded that the assessee had a master-servant relationship with Bhartiya Vidya Bhavan. Too much premium has been given of the usage of word `honorarium' at one place. It is a settled law in taxation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 hands of the assessee. 15. Here we find that BVB has also categorically stated that the assessee is not its employee. The TDS certificate in this regard also taken into this effect. While considering the assessee's receipt as salary from BVB the Assessing Officer is also proceeding to allow the payment to 60 junior instructors and 20 senior instructors and disallowing the other expenses claimed by the assessee. This action of the Assessing Officer is quite contradictory. 16. Here we find that it is not the case of the Assessing Officer that the other expenses claimed by the assessee are bogus. Rather in his opinion these expenses were not required. In our considered opinion the Assessing Officer is trying to treat these contractual receipts as salary only for his endeavour to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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