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2016 (7) TMI 266

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..... e, for the limited purpose, we set aside this issue to the Assessing Officer to verify the expenses and take decision as per law. - ITA No. 194/JP/2014 - - - Dated:- 7-6-2016 - SHRI KUL BHARAT, JM SHRI T.R.MEENA, AM For The Assessee : Shri Mahendra Gargieya (Adv) For The Revenue : Shri J.R. Pareek (JCIT) ORDER PER T.R. MEENA, A.M. This is an appeal filed by the assessee against the order dated 24/01/2014 passed by the ld. CIT(A), Kota for the assessment year 2009-10, wherein the assessee raised following grounds as under: 1. Under the facts and in the circumstances of the case, the ld CIT(A0 has grossly erred and wrongly holding the relationship of employer and employee between Resonance Institute and assessee by treating the receipt from the said institute in the nature of salary receipt in the place of professional receipt which is supported by institute agreement. 2. Under the facts and circumstances of the case the ld CIT(A) has grossly erred and wrongly by allowing professional expenses ₹ 340140 against claimed ₹ 657957. 2. The assessee filed his return for the year under consideration on 29/09/2009 declaring total in .....

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..... performed similar nature of duties as performed by him in the Resonance, Kota. He further held that all the faculties of Allen Carrier Institute, Kota are doing identical nature of work, as claimed by the assessee and they are showing the remuneration/receipts as income from salary. Accordingly, the ld Assessing Officer held the total receipt under the head income from salary. 3. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ld CIT(A), who had allowed the appeal partly by considering the comparable case of Shri Bharat Matoria A.Y. 2009-10 appeal No. 566/2011-12. The findings of this case has been reproduced by the ld CIT(A) on page No. 8 and 9 of his order by applying the same logic. The ld CIT(A) treated the assessee s income as salary as he found employer employee relationship but on the basis of order passed in case of Shri Bharat Matoria, he allowed deduction on account of expenses claimed at ₹ 3,40,140/-. 4. Now the assessee is in appeal before us. The AR of the assessee has reiterated the arguments made before the ld CIT(A) and further argued that the assessee had made professional agreement with M/s Resonance .....

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..... ied Engineer having his degree from IIT Guwahati and 5 Years experience in advising, guiding and coaching students for such examinations. WHEREAS, after detailed discussions and negotiations, the first party wishes to engage the party of the second part as CONSULTANT and the second party is agreeable to such an engagement. 2. FUNCTIONS / DUTIES OF CONSULTANTS 2.3 The duties of the Consultant shall include the following a) To advise the Institute in designing the Course structure of Maths for the IIT JEE aspirants; c) Development of entrance tests Maths into Resonance itself; e) Setting the overall pace of teaching Maths depending on prior preparedness of students (class XI, class XII, droppers, etc.) i) To assist and participate in psychological counseling for students and also of the parents of the students; k) To teach those topics of Maths to the students which are agreed to be taught by the Consultant from time to time depending on the need of the students and the convenience of the consultant so however the he will take at least 18 classes in a week; l) Preparing and delivering the summary of their lectures as and when d .....

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..... he act. The books of account was duly audited, which has been accepted by the assessee without applying the provisions of Section 145 of the Act. The ld AR has further relied on the decision in the case of CIT v/s Maharaja Shree Umed Mills Ltd. (1991) 192 ITR 565 (Raj) and prayed to allow the appeal in favour of the assessee. 5. At the outset, the ld DR has vehemently supported the order of the ld CIT(A). 6. We have heard the rival contentions of both the parties and perused the material available on the record. We have also gone through the terms and conditions of the agreement, which has been reproduced in the preceding paras of this order. The assessee is a B.Tech from IIT, Guwahati, who has expertise in math and as per agreement, he had provided professional service for the student of Resonance Institute, who provides coaching for preparation of IIT entrance test. The assessee is provided lump sum receipts on the basis of contract for providing the services to the institution. The TDS deducted by the Resonance by treating these payments as professional and given TDS certificate in form No. 16A. The assessee is free to do work with other institutions also. He had employed .....

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..... tract is for contract of services then it comes within the purview of employee and employer relationship. If it is for contract for services , then it is between the Professional and the Entrepreneur. 4.4. Admittedly, the assessee was a B-Tech qualified Engineer and was having 4 years experience in advising, guiding and coaching the students for such examination. Thus the assessee being the Engineering Graduate from IIT Kanpur had 4 years experience after completing his graduation to provide consultancy services of coaching for examination. This fact is not disputed by the Revenue, rather the revenue had built up its castle on this clause. In our reading, the revenue has mis-read the recital and has wrongly read that 2005-06 was the first year of employment of the assessee. The agreement clearly shows that prior to 2005-06 or prior to the entering into Agreement, the consultant namely the assessee was having 4 years teaching experience and also having the experience of advising and guiding. In fact, the issue of employee and employer contract is no more res integra and the Hon ble Supreme Court in the matter of Pyre Lal Adishwar lal vs. CIT, (1960) 40 ITR 17 (SC) has held .....

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..... sing, guiding and coaching such students for examination. We fail to appreciate as to how the AO has concluded that the assessee has graduated immediately before joining the Resonance Institute in the year 2005-06 when the agreement itself mentioned that he was having 4 years experience of advising, guiding and coaching students. It is a common knowledge and the Bench can take the court notice that if a student is studying in IIT, then the student will not have the experience in advising, guiding and coaching the students during his student career. His career, in our understanding, as a teacher will commence only after completing the graduation and thereafter he will acquire the experience for advising, guiding and teaching. Further to say that the assessee was taking the classes from Shri R.C. Sharma and was to take classes on same pattern, in our opinion, the same does not help the AO. It does not lead to any conclusion that Shri R.C. Sharma was a faculty of Chemistry or Physics or any other subject. Every institute, has its own way of conducting the classes and is required to train its consultant/profession the ethics, protocol etc. during orientation program and if the assessee .....

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..... enying the expenses etc was that the assessee has been treated as a salaried employee instead of Consultant. Once we have held that the assessee is a consultant, therefore, as a consequence, the assessee is entitled to benefit under the Act. Therefore, ground no. 1.1 and 1.2 are also decided in favour of the assessee. No reason whatsoever has been given by the authorities below for rejecting the books of account. The sole reason given by the authorities below was that the assessee is a salaried employee and not the professional. Since we have held that the assessee is a professional, therefore, this ground is also decided in favour of the assessee. Respectfully by following the decision of the Coordinate Bench on identical facts and circumstances being precedent, the assessee s case is covered by this decision, accordingly held that the assessee s receipts are professional and expenses claimed by the assessee are to be considered by the Assessing Officer. Therefore, for the limited purpose, we set aside this issue to the Assessing Officer to verify the expenses and take decision as per law. 7. In the result, appeal of assessee is partly allowed. Order pronounced in the .....

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