Sri Bhagavan Mahaveer Jain Educational & Cultural Trust, Bangalore V. The Deputy Commissioner Of Income Tax (International Taxation), Bengaluru

ITA 1870/BANG/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5030 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 13-10-2020
• Assessment Year: 2017-2018
• Appeal Filed On: 29-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYADARSHI MISHRA
• Keywords: Opportunity of being heard; Set aside
• Section: 201(1); 201; 13; 246

Judgement Text

IT(IT)A NO.1870/BANG/2019 SRI BHAGAVAN MAHAVEER JAIN EDUCATIONAL & CULTURAL TRUST, BANGALORE IN THE INCOME TAX APPELLATE TRIBUNAL BBENCH: BANGALORE BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBERAND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER IT(IT)A NO.1870/BANG/2019 ASSESSMENTYEAR:2017-18 SRI BHAGAVAN MAHAVEER JAIN EDUCATIONAL & CULTURAL TRUST JAIN INTERNATIONAL RESIDENTIAL SCHOOL JAKKASANDRA POST KANAKPURA ROAD BENGALURU 562 112 PAN NO : AABTS1497G VS. DEPUTY COMMISSIONER OF INCOME-TAX(IT) BENGALURU APPELLANT RESPONDENT APPELLANT BY : SHRI SUMAN LUNKAR, A.R. RESPONDENT BY : SHRI PRIYADARSHI MISHRA, D.R. DATE OF HEARING : 13.10.2020 DATE OF PRONOUNCEMENT : 13.10.2020 O R D E R PERB.R. BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 22-07-2019 PASSED BY LD CIT(A) FOR ASSESSMENT YEAR 2017-18, WHEREIN HE HAS DISMISSED THE APPEAL HOLDING THAT TH E APPEAL FILED BY THE ASSESSEE IS NOT A VALID APPEAL AND IT SHOULD HAVE BEEN FILED BY M/S JAIN INTERNATIONAL RESIDENTIAL SCHOOL. 2. THE LD A.R SUBMITTED THAT THE ASSESSEE HEREIN IS A TRUST AND IT OWNS & RUNS AN EDUCATIONAL INSTITUTION NAMED JAIN INTERNATIONAL IT(IT)A NO.1870/BANG/2019 SRI BHAGAVAN MAHAVEER JAIN EDUCATIONAL & CULTURAL TRUST, BANGALORE PAGE 2 OF 7 RESIDENTIAL SCHOOL. THE ASSESSING OFFICER PASSED AN ORDER U/S 201(1) AND 201(1A) OF THE ACT FOR FINANCIAL YEAR 20 16-17 RELEVANT TO THE ASSESSMENT ORDER HOLDING THAT CERTAIN PAYMENTS MADE BY THE ASSESSEE TO OVERSEAS ENTITIES IS IN THE NATURE OF ROYALTY AND FEE FOR TECHNICAL SERVICES AND THE ASSESSEE SHOULD HAVE DE DUCTED TAX AT SOURCE FROM THOSE PAYMENTS. THE SAID PAYMENTS RELA TE TO COURSE FEE PAID TO FOREIGN UNIVERSITIES AS DETAILED BELOW: - SL.NO. PAYMENT MADE TO PURPOSE AMOUNT OF PAYMENT MADE IN RS. 1. INTNL BACCALAUREATE ORG (SG BR) SINGAPORE SCHOOL COURSE FEES 1,28,380/- 2. UNIVERSITY OF CAMBRIDGE LOCAL EXAMINATION SYNDICATE, UK SCHOOL DIPLOMA ANNUAL FEES 18,568/- 3. INTNL. BACCALAUREATE (SG BR.) SINGAPORE SCHOOL COURSE FEES 2,35,386/- 4. INTNL. BACCALAUREATE ORG (SG BR) SINGAPORE SCHOOL COURSE FEES 43,574/- 5. INTNL BACCALAUREATE ORG (SG BR), SINGAPORE SCHOOL DELEGATE FEES 2,40,912/- 6. UNIVERSITY OF CAMBIRDGE LOCAL EXAMINATION SYNDICATE, UK SCHOOL COURSE FEES 10,658/- 7. UNIVERSITY OF CAMBIRDGE LOCAL EXAMINATION SYNDICATE, UK SCHOOL COURSE FEES 12,150/- 8. UNIVERSITY OF CAMBRIDGE LOCAL EXAMINATION SYNDICATE, UK ONLINE WORKSHOP FEES 40,260/- 9. INTNL. BACCALAUREATE ORG (SG BR), SINGAPORE SCHOOL DIPLOMA ANNUAL FEES 6,83,981/- 10. UNIVERSITY OF CAMBRIDGE LOCAL EXAMINATION SYNDICATE, UK SCHOOL COURSE FEES 1,99,857/- 11. UNIVERSITY OF CAMBRIDGE LOCAL EXAMINATION SYNDICATE, UK SCHOOL COURSE FEES 5,869/- 12. INTNL. BACCALAUREATE ORG (SG BR) SINGAPORE REGULAR REGISTRATION FEES 5,33,579/- 13. UNIVERSITY OF CAMBRIDGE LOCAL EXAMINATION SYNDICATE, UK HINDI AS SECOND LANGUAGE FEES 39,697/- TOTAL 21,92,871/- IT(IT)A NO.1870/BANG/2019 SRI BHAGAVAN MAHAVEER JAIN EDUCATIONAL & CULTURAL TRUST, BANGALORE PAGE 3 OF 7 ACCORDINGLY, THE AO HELD THE ASSESSEE TO BE ASSESSE E IN DEFAULT AND FURTHER APPLYING THE PROVISIONS OF SEC.206AA OF THE ACT, HE RAISED DEMAND OF RS.4,38,574/- @ HIGHER RATE OF 20% U/S 20 1(1), INTEREST DEMAND U/S 201(1A) TO THE TUNE OF RS.3,07,002/- AND SURCHARGE DEMAND OF RS.22,367/-. THUS, THE AGGREGATE DEMAND RAISED BY THE ASSESSEE WAS RS.7,67,940/-. 3. IT IS PERTINENT TO NOTE THAT THE ASSESSING OF FICER RAISED THIS DEMAND BY MENTIONING THE NAME OF THE ASSESSEE AS UN DER:- M/S JAIN INTERNATIONAL RESIDENTIAL SCHOOL C/O SRI BHAGAWAN MAHAVEER JAIN EDUCATIONAL AND CULT URAL TRUST THE ASSESSING OFFICER MENTIONED PAN NUMBER AS AABTS 1497G IN THE ORDER AND IT IS THE PAN NUMBER OF SRI BHAGAVAN MAHAVEER JAIN EDUCATIONAL & CULTURAL TRUST, I.E., THE ASSESSEE HE REIN. 4. THE ASSESSEE CHALLENGED THE DEMAND RAISED BY THE ASSESSING OFFICER BY FILING APPEAL BEFORE LD. CIT(A). THE AP PEAL WAS FILED BY THE ASSESSEE-TRUST, I.E., SRI BHAGAVAN MAHAVEER JAI N EDUCATIONAL & CULTURAL TRUST, WHICH OWNS & RUNS M/S. JAIN INTERNA TIONAL RESIDENTIAL SCHOOL. THE LD. CIT(A) DISMISSED THE APPEAL WITH THE FOLLOWING OBSERVATIONS: 11. THE ORDER U/S 201(1) AND 201(1A) IS PASSED AGAI NST JAIN INTERNATIONAL RESIDENTIAL SCHOOL. AS PER SEC. 246 THE ASSESSEE AGGRIEVED BY THE ORDER CAN FILE AN APPEAL BEFORE CI T(A). IN THE PRESENT CASE JAIN INTERNATIONAL RESIDENTIAL SCHOOL IS THE AGGRIEVED PARTY WHEREAS THE APPEAL IS FILED BY SRI BHAGAVAN M AHAVEER JAIN EDUCATIONAL & CULTURAL TRUST. 12. THEREFORE, I HOLD THAT THE APPEAL FILED BY SRI BHAGAVAN MAHAVEER JAIN EDUCATIONAL & CULTURAL TRUST IS NOT A VALID APPEAL AND ONLY PAYER/DEDUCTOR AGAINST WHICH ORDER U/S 201 (1) AND 201(1A) IT(IT)A NO.1870/BANG/2019 SRI BHAGAVAN MAHAVEER JAIN EDUCATIONAL & CULTURAL TRUST, BANGALORE PAGE 4 OF 7 IS PASSED CAN FILE THE APPEAL. AS A RESULT, THE AP PEAL IS BEING DISMISSED BEING AN INVALID APPEAL. 5. THE ASSESSEE IS AGGRIEVED WITH THE DECISION SO R ENDERED BY LD. CIT(A). THE LD. A.R. SUBMITTED THAT M/S. JAI N INTERNATIONAL RESIDENTIAL SCHOOL IS OWNED AND RUN B Y THE ASSESSEE HEREIN, I.E., M/S. SRI BHAGAVAN MAHAVEER J AIN EDUCATIONAL & CULTURAL TRUST. HENCE, M/S. JAIN INT ERNATIONAL RESIDENTIAL SCHOOL IS NOT A SEPARATE TAXABLE ENTITY UNDER THE INCOME TAX ACT. SHE SUBMITTED THAT THOUGH THE ASSE SSING OFFICER HAS PASSED THE ORDER IN THE NAME OF M/S. JA IN INTERNATIONAL RESIDENTIAL SCHOOL, THE SAME WOULD RE FER TO M/S. SRI BHAGAVAN MAHAVEER JAIN EDUCATIONAL & CULTURAL T RUST ONLY, SINCE IT IS THE OWNER OF M/S. JAIN INTERNATIO NAL RESIDENTIAL SCHOOL. ACCORDINGLY, SHE SUBMITTED THA T THE APPEAL COULD ONLY BE FILED BY THE ASSESSABLE ENTITY NAMELY M/S. SRI BHAGAVAN MAHAVEER JAIN EDUCATIONAL & CULTU RAL TRUST. ACCORDINGLY THE LD. A.R. SUBMITTED THAT THE APPEAL WAS RIGHTLY FILED BY M/S. SRI BHAGAVAN MAHAVEER JAIN ED UCATIONAL & CULTURAL TRUST AND HENCE THE LD. CIT(A) WAS NOT C ORRECT IN LAW IN HOLDING THAT THE SAID APPEAL IS NOT A VALID APPEAL. ACCORDINGLY, THE LD. A.R. PRAYED THAT THE ORDER PAS SED BY LD. CIT(A) SHOULD BE SET ASIDE AND THE MATTER SHOULD BE RESTORED TO THE FILE OF LD. CIT(A) FOR ADJUDICATING THE ISSU ES ON MERIT. 6. THE LD. D.R. ON THE CONTRARY, SUPPORTED THE ORDE R PASSED BY LD. CIT(A). HOWEVER, HE SUBMITTED THAT H E DOES NOT HAVE ANY OBJECTION IN REMITTING THE ISSUES TO THE F ILE OF LD. CIT(A) FOR ADJUDICATING THEM IN ACCORDANCE WITH LAW . 7. WE HEARD THE PARTIES AND PERUSED THE RECORD. WE NOTICE THAT THE ASSESSING OFFICER HAS MADE THE FOLLOWING O BSERVATIONS IT(IT)A NO.1870/BANG/2019 SRI BHAGAVAN MAHAVEER JAIN EDUCATIONAL & CULTURAL TRUST, BANGALORE PAGE 5 OF 7 IN THE FIRST PARAGRAPH OF THE ORDER PASSED BY HIM U /S 201(1) AND 201(1A) OF THE ACT. 1.1 M/S. JAIN INTERNATIONAL RESIDENTIAL SCHOOL IS ESTAB LISHED BY A TRUST NAMELY, SRI BHAGAWAN MAHAVEER JAIN EDUCATIO NAL & CULTURAL TRUST AND IS AN AUTHORIZED IGCSE AND IB SCHOOL IN BANGALORE. THE SCHOOL PROVIDES PROGRAMME BASED ON CAMBRIDGE INTERNATIONAL EXAMINATION (CIE), INTERNATIONAL CENT RAL CERTIFICATE OF EDUCATION (IGCSE) AND THE INTERNATIONAL BACCALAUREA TE (IB). THE IGCSE IS FOR THE GRADE 9 & GRADE 10 AND IB IS FOR T HE GRADE 11 & GRADE 12. THE SCHOOL IS ACCREDITED TO THE BOARD OF INTERNATIONAL BACCALAUREATE ORGANIZATION (THE IB) A SWISS FOUND ATION, WITH ITS PRINCIPAL REGISTERED ADDRESS AT GENEVA, SWITZERLAND , CAMBRIDGE INTERNATIONAL EXAMINATION (CIE) AND INTERNATIONAL C ENTRAL CERTIFICATE OF EDUCATION (IGCSE). 8. WE NOTICE THAT THE ASSESSING OFFICER HAS MADE IT CLEAR THAT M/S. JAIN INTERNATIONAL SCHOOL WAS ESTABLISHED BY THE ASSESSEE HEREIN. THE ASSESSING OFFICER HAS PASSED THE ORDER UNDER THE PAN NUMBER OF THE ASSESSEE HEREIN AND STA TUS IS MENTIONED AS TRUST, WHICH IS AGAIN THE STATUS OF THE ASSESSEE HEREIN. IT IS THE SUBMISSION OF THE LD. A .R. THAT M/S. JAIN INTERNATIONAL RESIDENTIAL SCHOOL IS NOT A SEPA RATE TAXABLE ENTITY AND ITS ACCOUNTS WERE MERGED WITH ACCOUNTS O F THE ASSESSEE HEREIN. IT WAS ALSO SUBMITTED THAT IMPUGN ED ORDER PASSED BY THE ASSESSING OFFICER SHOULD BE CONSIDERE D AS REFERRING TO THE ASSESSEE HEREIN ONLY SINCE M/S. JA IN INTERNATIONAL RESIDENTIAL SCHOOL DOES NOT HAVE SEPA RATE STANDING OF ITS OWN UNDER THE INCOME TAX ACT. 9. WE FIND MERIT IN THE SUBMISSIONS MADE BY LD. A.R . WHEN M/S. JAIN INTERNATIONAL RESIDENTIAL SCHOOL IS OWNED AND RUN BY THE ASSESSEE HEREIN, THEN THE CAUSE OF A CTION RELATING TO M/S. JAIN INTERNATIONAL RESIDENTIAL SCH OOL SHALL ARISE AGAINST THE ASSESSEE ONLY. ACCORDINGLY, WE A RE OF THE VIEW THAT THE LD. CIT(A) WAS NOT RIGHT IN LAW IN OB SERVING THAT IT(IT)A NO.1870/BANG/2019 SRI BHAGAVAN MAHAVEER JAIN EDUCATIONAL & CULTURAL TRUST, BANGALORE PAGE 6 OF 7 THE ASSESSEE HEREIN COULD NOT HAVE FILED THE APPEAL BEFORE HIM IN RESPECT OF THE IMPUGNED ORDER PASSED BY THE ASSE SSING OFFICER. IN VIEW OF THE ABOVE, WE SET ASIDE THE O RDER PASSED BY THE LD. CIT(A). WE ALSO HOLD THAT THE APPEAL FILED BY THE ASSESSEE HEREIN BEFORE LD. CIT(A) IS A VALID APPEAL AND IT IS THE ASSESSEE WHICH COULD ALONE FILE THE APPEAL IN RESPE CT OF DEMAND RAISED AGAINST M/S. JAIN INTERNATIONAL RESID ENTIAL SCHOOL. ACCORDINGLY, WE SET ASIDE THE ORDER PASSED BY LD CIT(A). 10. SINCE THE LD. CIT(A) HAS NOT DISPOSED OF THE AP PEAL ON MERITS, WE FEEL IT PROPER TO RESTORE ALL THE ISSUES TO THE FILE OF THE LD. CIT(A) FOR ADJUDICATING THEM ON MERITS, AF TER AFFORDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . WE ORDER ACCORDINGLY. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH OCT, 2020 SD/- (GEORGE GEORGE K.) JUDICIAL MEMBER SD/- (B.R. BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED 13 TH OCT, 2020. VG/SPS IT(IT)A NO.1870/BANG/2019 SRI BHAGAVAN MAHAVEER JAIN EDUCATIONAL & CULTURAL TRUST, BANGALORE PAGE 7 OF 7 COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.