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Rajasthan Knowledge Corporation Limited Versus Income Tax Officer, TDS-2, Jaipur

2016 (2) TMI 877 - ITAT JAIPUR

TDS U/s 194J - sharing of fees - payments made by the appellant to ITGK for its share in RS-CIT course fees - Held that:- As decided in assessee’s own case for A.Y. 2009-10 to 2011-12 the uncontroverted fact which emerges from the record is to the effect that the payments in question were not made by assessee qua any service of professional or technical nature rendered to the payee. All the above entities by a valid collaboration, formed a business module on the revenue sharing basis for imparti .....

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- DELHI HIGH COURT], the act of sharing of revenue in a multi entity business model cannot be held as contract payments and taking the logic further they cannot be held as payments on account of rendering of any professional or technical services as contemplated by Section 194J of the Act - Decided in favour of assessee - ITA No. 896/JP/2014 - Dated:- 27-1-2016 - SHRI T.R.MEENA, AM AND SHRI LALIET KUMAR, JM For The Assessee : Shri R.S. Singhvi (CA) and Shri P.D. Baid (CA) For The Revenue : Shri .....

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rounds contained hereinafter and needs to be quashed. ii) That the learned Assessing officer has not followed Principal of Natural Justice and has passed a mechanical order and CIT (Appeals)-III in confirming the same, without considering the submissions/ evidences produced by the appellant. iii) That learned Assessing Officer and Commissioner of Income Tax (Appeals)-III, Jaipur has not considered the findings and detailed Order given by Learned CIT (Appeal, Alwar) in Appeal No. 1083/JPR/11-12, .....

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vices and appellant is under obligation to deduct TDS under section 194J of the Income tax Act, 1961, whereas it has been submitted that it is only arrangement for sharing of fees/Revenue received from the learners and therefore, the findings of learned assessing officer need to be quashed and liability to be deleted. 3(i) That the learned assessing officer and Commissioner of Income Tax (Appeals)-III, Jaipur has further erred in law as well as in facts in holding that the appellant is liable to .....

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sed by Assessing Office needs to be quashed and relief granted. 4. That the Learned Assessing Officer and Commissioner of Income Tax (Appeals)-III, Jaipur has erred and has wrongly held that appellant has not deducted at sources on amount paid aggregating to ₹ 1,60,17,471/- being 'Centers share' in course fees. In fact this remittance was also for fee for 'Other Courses' remitted to ITGK only and is of the same nature as other remittance and hence finding needs to be delete .....

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relief granted. However, the Assessing Officer has wrongly mentioned that full particulars/ details in support of assessee's claim in this connection were not provided by appellant, whereas no such details/papers in this connection were called for. (ii) The CIT (Appeals)-III has also erred in giving certain findings, which are not relevant to appellant's case and without giving an opportunity to appellant to distinguish its stand. (iii) Further the Learned CIT (Appeals)-III has erred in .....

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T course fees and liable to deduct TDS U/s 194J of the Income Tax Act, 1961 (in short the Act). The ITO (TDS)-2, Jaipur has observed that the assessee had made following payments under various heads as under:- Head Particulars F.Y. 2011-12 Share in RS-CIT Course Fees ITGK s share in RS-CIT Course fees 15,30,61,420/- Vardhaman Mahaveer Open University share in RS-CIT Exam 1,12,14,000/- Share in course fees Center s Share in course fee 1,60,17,471/- As per his observation, he has not deducted TDS .....

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ting agencies/centres like DLC, PSA & ITGKs. He further considered the word technical with reference to fees for technical services and held that payment made to ITGK by the assessee falls under the category of technical service and is liable to be deducted TDS U/s 194J of the Act. The payment made to ITGK was claimed as sharing of income for course fees not expenditure. The assessee company for the purpose of its convenience, had categorized the said fees shared as marketing claim and infra .....

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es 153061420 10 15306142 2544753 17850895 Share in course fees Centres Share 16017471 10 1601747 216035 1817782 Total 1,69,07,889 27,60,788 1,96,68,677 3. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ld CIT(A), who had confirmed the order of the ld Assessing Officer by observing as under:- 4.3 I have carefully considered the findings of the AO as also the submission of the appellant. The undisputed facts are that M/s RKCL has been incorporated .....

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d to appoint ITGK s. DLC s were appointed for inter related other procedural activities and VMOU was appointed for conducting of exams. It is also fact that M/s RKCL for completion of such task has assigned various specific works to different agencies as mentioned above and for such assigned works, necessary agreements have also be assigned. For such assigned work M/s RKCL has made payment to these agencies. It is also fact that while making payment to PSA s, DLC s and MKCL s TDS has been deduct .....

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ervices in Explanation 2 to sec. 9 l(vii), any services in consideration of any managerial, technical or consultancy services was covered in the definition of technical services and that the services rendered by ITGK s were covered under this definition. Accordingly as per A.O. the payment made/indirectly received from M/s RKCL by the ITGK s was liable for TDS and accordingly the A.O. determined the TDS liability u/s 201(1 )/201(1A) of IT Act. On the other hand the appellant case is that for app .....

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education to the learners and that they were sharing the fees as per their agreed terms and conditions. It is also stated that both M/s ITGK and VMOU have not issued any bills or invoices on the RKCL and that accordingly it cannot said that any payment was made by M/s RKCL to ITGK s for rendering of any technical services. The appellant has also placed reliance on various case laws including decision of CIT(A), Alwar in appellant own case. However, on careful consideration of all these relevant .....

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t was never a business model and in fact the objective was to promote the IT enabled educational pragramme and accordingly M/s RKCL assigned different work to different agencies i.e DLC, PSA, ITGK, VMOU etc. M/s RKCL developed different support system and involved various agencies who were assigned specific work and these agencies including M/s ITGK were to deliver such work/services as per the requirement of M/s RKCL for which payment was made to these agencies. All these agencies have carried .....

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nt has deducted TDS on the payments. As regards the contention of the appellant that no payment was made by M/s RKCL to M/s ITGK, it may be noted that such contention cannot said to be correct in as much as it was only for the procedural purpose and administrative convenience that the aggregate amount from the learners was first collected by M/s ITGK and then the whole amount was remitted to M/s RKCL. Subsequently M/s RKCL kept ₹ 850/- and remaining amount of ₹ 1450/- per learner was .....

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ssue relying on the decision in the case of CIT Vs. NIIT Ltd. (supra). However, as mentioned by the A.O. the facts in the case of CIT Vs. NIIT Ltd. were different with the facts of the appellant case and the basic and vital difference in the facts of the appellant case was that in the appellant case the appellant is the dominant player and other agencies have rendered the services as per the requirement of assessee company. Moreover, in the case of NIIT Ltd., the NIIT was an existing business br .....

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mes under the brand name NIIT was just like a saleable product and any interested party could purchase the same with certain conditions. But in the appellant case no such business brand or saleable product was in existence. In fact the objective and mandate in the case of the appellant was to enhance and improve the IT enabled education in the state of Rajasthan and for achievement of such object the appellant has taken professional and technical services of other agencies including ITGK s for w .....

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ervices and on the payment made on account of such services TDS was to be deducted u/s 194J of IT Act. In view of these facts the A.O. has rightly raised demand u/s 201(1)/201(1A) of IT Act amounting to ₹ 19668677/-. The grounds of appeal are accordingly dismissed. 4. Now the assessee is appeal before us. The ld AR of the assessee has reiterated the arguments made before the ld CIT(A) and also argued that the appellant has not liable to deduct any tax at source on the payment made to ITGK/ .....

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trict Lead Centre (DLC). The PSA has a relevant expertise/experience carrying out certain activities on behalf of the assessee. The assessee shall pay ₹ 100 per confirmed learner. Various technologies and services are provided by MKCL as per agreement. These activities were carried out by DLC. The certification has been given by the Vardhaman, Mahaveer Open University, Kota. The learner is required to deposit entire course fees @ ₹ 2300 for RS-CIT with the concerned ITGK, who receive .....

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has further drawn our attention on assessee s case decided by this Bench in ITA No. 38 to 40/JP/2013 for A.Y. 2009-10 to 2011-12 vide order dated 13/2/2015 wherein identical issue has been considered by the Hon ble Bench and decided the appeal in favour of the assessee. Therefore, he prayed to reverse the order of the ld CIT(A). 5. At the outset, the ld DR has vehemently supported the order of the lower authorities and prayed to uphold the order of the ld CIT(A). 6. We have heard the rival conte .....

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