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2016 (7) TMI 266 - ITAT JAIPUR

2016 (7) TMI 266 - ITAT JAIPUR - [2016] 50 ITR (Trib) 108 - Salary receipt OR professional receipt - Held that:- We have 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 .....

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on was deducted. - 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. - 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 a .....

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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 income of ₹ 9,69,450/-. The case was processed U/s 143(3) of the Income Tax Act, 1961 (in short the Act). The assessee is having income from salary, business and house property. The ld A .....

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ich are involved in providing coaching to the students for preparing the IIT exam. The assessee was engaged in following activities in above institute and from the institute, assessee was taking remuneration as professional receipts: (i) Notes preparation for students (ii) Checking of notebooks, test paper etc. (iii) Preparing test papers. (iv) Handling daily practice problem. The ld Assessing Officer gave reasonable opportunity of being heard on treatment given by the assessee as business and p .....

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pt as professional income. Accordingly, the assessee has shown as professional fees. After considering the assessee s reply, the ld Assessing Officer has held that the assessee filed copy of agreement but not filed copy of the appellant as salaried person. The assessee worked with the Resonance Coaching from 01/4/2008 to 31/3/2008 on professional charge basis but in Bansal classes Pvt. Ltd., he worked on the basis of salary for the period of 23/3/2009 to 31/3/2009 and performed similar nature of .....

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y 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 .....

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T in the case of Shiv Pratap Raghuvanshi v/s ACIT in ITA No.551/JP/2013 dated 12.02.2016 A.Y. 2007-08 wherein identical issue has been decided in favour of the assessee as professional receipts vide order dated 12/12/2016. He further relied on the decision of Hon'ble Supreme Court in the case of Piyare Lal Adishwar Lal v/s CIT (1960) 40 ITR 0017 (SC) wherein it has been held that the relation between the employer and employee is to be governed by the nature of work there was due control and .....

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uwahati and five years experience in advising, guiding and teaching various subjects relevant for preparation of entrance examination for engineering colleges. The contract is for only one year. There is no such relation has been expressed as employer and employee. It is a contract for service and not a contract of service. He has drawn our attention on various terms and conditions of the agreement, which are as under:- RECITALS: Whereas the party of the first part is engaged in the business of .....

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EAS the party of the second part is B-Tech qualified 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 i .....

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he 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 delivered; m) To design and prepare Daily Practice Problems (DPP) for their part of subject - However, the size, depth and difficulty level shall be decided by the Consultant based on his assessment of preparedness of the Students whom he is guiding; n) Guiding teachers of the Institute for effective content .....

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f teaching hours. The assessee was discharging his duties as a consultant for the subject of Maths however, there is no restriction upon the appellant to give advice and consultancy services to other parties in respect of other subjects, which was not part of the agreement. Even the schedules of teaching hours had been decided by the assessee only. Question papers and answer sheets for tests conducted by Resonance are prepared by the assessee with the help of his own staff. The assessee accordin .....

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ther relied on the decision of Hon'ble Supreme Court in the case of COMMISSIONER OF INCOME-TAX (CENTRAL), CALCUTTA Vs. DAULAT RAM RAWATMULL. [1973] 87 ITR 349 (SC) wherein it has been held that what is apparent is real unless proved contrary. He further argued that the Hon ble Jaipur ITAT in the case of ACIT v/s Kamlesh Soni (2007) 107 TTJ 836 (Jpr Trib) has held that in identical facts and circumstances of the case, receipts under the head professional income and not salary. The ld Assessin .....

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ontentions 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 .....

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aws relied by the assessee are squarely applicable particularly recent decision of the Coordinate Bench in the case of Shiv Pratap Raghuvanshi v/s ACIT in ITA No.551/JP/2013 dated 12.02.2016 A.Y. 2007-08. The operative portion of the Coordinate Bench s order is reproduced as under:- 4.2. We have heard the rival submissions and perused the material on record. The consultancy agreement dated 1.4.2006 reveals that the appointment as Consultant is for a period of one year. It also mentioned that the .....

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Leave Encashment. We would like to mention that the assessee was also entitled to give advise and consultancy service to other parties, or organization or enterprises in respect of subject matter which are not part of the agreement i.e. to say that the agreement has restricted the subject of consultancy to Chemistry only. Whereas as per the case of the revenue, the assessee was teaching Physics in the year 2005-06, therefore, the consultant, in our view was free to render the services as Consul .....

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f the facts i.e. whether the contract between the assessee and the Resonance was for contract of services or contract for services . If the contract 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 exam .....

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ng 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 that the correct method of approach is whether having regard to the nature of work there was due control and supervision by the employer. The receipt of remuneration .....

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In our opinion, a profession will imply any vocation carried on by an individual or group of individuals requiring the predominantly intellectual skills pursuing that vocation, requiring specialized advance education or expertise. It is an admitted case that the assessee is a professional having B-Tech degree and four years experience in advising, guiding and teaching various subjects relevant for preparation of entrance examination for engineering colleges. The conclusion drawn by AO that the a .....

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een given. In fact, if we look into the consultancy agreement, the assessee was required to provide the consultant services for attracting the new teaching talent as well as for growing the young teachers and guiding of teachers of the Institute for delivery in classes. This clearly shows that the relationship between the assessee and Resonance was not of employee and employer. The conclusion of the AO that the assessee has joined the Institute in A.Y. 2005-06 after his graduation and at the sta .....

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ng 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 assesse .....

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th other instances referred in the order, do not constitute the relationship between the assessee and the Resonance as of employee and employer. In fact, our above said view is supported by the various judgments referred by the ld. Counsel for the assessee and more particularly in the matter of Kamlesh Soni, 107 TTJ 836 wherein in the identical facts and circumstances, the relationship between the teacher and the Institute was held to be of consultant in nature. In the light of the above, we hav .....

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r of the assessee to treat him as professional. In the light of the above, we hold that the assessee is a professional and was not an employee of Resonance. At this stage, we would like to refer that the AO relied upon the judgment passed by the Hon ble Supreme Court in the matter of McDowell & Co. Ltd. vs. CIT, 22 Taxman 11 (SC) to say that tax planning may be legitimate provided it is within the frame work of law. In our view the judgment relied upon by the AO, is against the revenue. In f .....

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