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In Re : UC Berkeley Center for Executive Education, USA

2016 (9) TMI 650 - AUTHORITY FOR ADVANCE RULINGS NEW DELHI

TDS u/s 195 - Chargeability to tax in India as fees for included services - Taxability of the consideration paid by Northwest in favour of the applicant for the services which it provides or as agree to provide - India-US DTAA - exemption from taxation - P.E. in India - Held that:- The applicant has provided all certificates including the certificate of its incorporation and has filed them as Exhibit-1 before us. From the certificate, it is clear that it is an educational institution for ca .....

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ervice, Philadelphia PA-19255 which is the certificate issued showing that the applicant is an exempt organization under Section 501(C)(3) of US Internal Revenue Code, or a religious or apostolic organization under Section 501(d). The learned counsel points out that this will be clear to support his contention that the applicant is an educational cum charitable institution. These certificates are countered by the Revenue. - The other objection of the Revenue was that all the faculties provid .....

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rs who come for a short period are well accommodated by Northwest India which creates a Permanent Establishment of the applicant in India. We have mentioned this objection only for being rejected. The Authority in its Ruling in Eruditus had also held that there not be a Permanent Establishment even if the Faculty is provided by the non-tax resident INSEAD. We would choose to go by that finding. - Thus the programme fee received by the applicant from Northwest would be governed by Article 12 .....

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ND, Mr. Sanjay Kumar, JCIT ORAL RULING ( By Sirpurkar J.) This application is made by UC Berkeley Center for Executive Education also known as CEE (for short), which is claimed to be a California based non-profit public benefit corporation formed for the purpose of operating executive education progammes. It is claimed in the application that CEE develops and delivers open enrolment and customs programmes for business executives in United States of America and also internationally. It is pointe .....

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UC Berkeley Center for Executive Education. The copy of the articles of incorporation of Newco Executive Education is filed as Exhibit-I by the applicant. 3. The applicant is a tax resident of the United States of America and it is an admitted position that there is a Double Taxation Avoidance Agreement (DTAA) between India and United States of America. 4. It is pointed out that the applicant has entered into an agreement dated 6.5.2014 titled as Programme Delivery Agreement with Northwest Unive .....

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me which was to be delivered by the applicant as per the schedule laid out in clause 1 of the Agreement. A look at that schedule suggests that 4 Modules were to be provided them from Module-1 to Module-4. They were to be executed in different manners for a limited period. 6. The applicant was also to develop the instructional material including work sheets etc. and was to arrange its faculty whereas the Northwest had agreed to market the programme in India. The intellectual property rights were .....

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g of the said term under Article 12 of India-US Double Tax Avoidance Agreement (DTAA for short) and/or the provisions of Section 9(1)(vii) of the Income Tax Act and, therefore, subject to withholding tax under Section 195 of the Income Tax Act, 1961? (ii) Whether in facts and circumstances of the case, activities undertaken by CEE/the Applicant in India namely teaching for 5 days would constitute a Permanent Establishment (PE) of the applicant in India in terms of Article 5 of the India-US Doubl .....

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aid by Northwest in favour of the applicant for the services which it provides or as agree to provide. 9. The Revenue has opposed this application on the sole ground that the applicant is not an educational institution. The Revenue further contends that unless the services are provided by an educational institution the consideration for those services would not be exempted from the tax liability. We have gone through the lengthy submissions by the Revenue. However, we do not find any substantial .....

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ulty of its own for running the programmes and the entire faculty is being provided by University of California, Berkeley. The Revenue, therefore, claims that the applicant is not directly involved in the activity of teaching. Again it is reiterated by the Revenue that it is not the applicant but the Berkeley University whose faculty offers the programmes to Northwest. There are some other insignificant contentions raised by the Revenue. However we have paraphrased the main objections of the Rev .....

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fall under the exclusive clause and any consideration from such services would be exempt from the taxability. We have seen the said Ruling very carefully. From the Ruling, it is clear that one INSEAD had entered into a program partnership with the applicant i.e Eruditus Education Private Limited which was an Indian taxpayer. The INSEAD was to provide the services of each for 11 days, 5 days, 6 days and 8 days and these services were to be provided by INSEAD Singapore, France, the teaching in Ind .....

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must consider the serious objections raised by the Revenue Department to the effect that the applicant is not an educational institution and that it is merely a facilitating institution. 12. We do not see any basis for these objections. The applicant has provided all certificates including the certificate of its incorporation and has filed them as Exhibit-1 before us. From the certificate, it is clear that it is an educational institution for carrying on charitable and educational activities all .....

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