ITO, Jaipur V. RAJASTHAN KNOWLDEGE CORP. LTD., Jaipur

ITA 38/JPR/2013

• Counselvise Citation: 3823114 RSA 2013
• Duration Of Justice: 2 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 04-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P D BAID CA DH
• Section: 194C; 201(1)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA- @ ITA NOS. 38, 39 & 40/JP/2013 FU/KZKJ.K O'K Z @ ASSESSMENT YEARS : 2009-10 TO 2011-12 THE I.T.O. T.D.S.-2, JAIPUR CUKE VS. M/S RAJASTHAN KNOWLEDGE CORPORATION LIMITED, 7-A, JHALANA INDUSTRIAL AREA, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: AAECR 1253 K VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT JKTLO DH VKSJ LS @ REVENUE BY : SHRI AJAY MALIK (ADDL.CIT) FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI R.S. SINGHVI (CA) & SHRI P.D. BAID (CA) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 04/12/2014 ?KKS'K .KK DH RKJH[ K @ DATE OF PRONOUNCEMENT : 13/02/2015 VKNS'K @ ORDER PER: R.P. TOLANI, J.M. THIS IS A SET OF THREE APPEALS FILED BY THE REVENUE FOR A.YS. 2009- 10, 2010-11 AND 2011-12 ARISING OUT OF COMMON ORDER OF LEARNED CIT(A), ALWAR DATED 18/10/2012. THE COMMON GROUND RA ISED IN ALL THE THREE APPEALS IS AS UNDER:- ITA 38,39 & 40/JP/2013_ ITO VS. RAJASTHAN KNOWLEDGE CORPORATION 2 THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THE ASSESSEE I.E. RAJASTHAN KNOWLEDGE CORPORATION LTD. N OT LIABLE FOR TDS U/S 194J OF THE I.T. ACT FOR PAYMENTS TO IT GYAN K ENDRA (ITGK) AND OTHERS. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE (I N SHORT KNOWN AS RKCL) IS AN ENTITY ALONG WITH FIVE OTHER ENTITIES FO R IMPARTING COMPUTER EDUCATION TO GOVERNMENT EMPLOYEES AND OTHER PERSONS IN STATE OF RAJASTHAN THROUGH ITS BUSINESS FRANCHISE NETWORK I.E . DISTRICT LEAD CENTERS (DLCS) AND I.T. GYAN KENDRAS (ITGK) THROUGH I TS PROGRAMME SUPPORT AGENCY (PSA). M/S RKCL THROUGH ITS PROGRAMM E SUPPORT AGENCY (PSA) HAS SET UP DISTRICT LEAD CENTRES. THE D LCS FURTHER APPOINT IT GYAN KENDRAS FOR RUNNING COURSES LIKE RS- CIT (RAJ. STATE CERTIFICATE COURSE IN IT), RS-CFA, RS-CEL, RS-CRM ET C. UNDER RESPECTIVE PSAS. THE I.T. GYAN KENDRAS COLLECTS RS. 2300/- PER S TUDENT FOR THE COURSE AND SEND THE FULL AMOUNT TO M/S RKCL WHICH I N TURN AFTER KEEPING RS. 850/- WITH ITSELF SENDS BACK RS. 1450/- TO I.T. GYAN KENDRAS AS THEIR SHARE TO EDUCATE THE COMPUTER PROG RAMME. OUT OF THIS AMOUNT OF RS. 850/-, M/S RKCL PAYS RS. 100/- PER ST UDENTS FOR PSAS AND RS. 75 PER STUDENT TO DISTRICT LEAD CENTERS (DL CS) ON WHICH THE COMPANY IS DEDUCTING. IN ASSESSEES CONSIDERATION T HE AMOUNTS WERE IN ITA 38,39 & 40/JP/2013_ ITO VS. RAJASTHAN KNOWLEDGE CORPORATION 3 THE NATURE OF REVENUE SHARING UNDER THE COLLABORATI ON BUSINESS OF ALL THESE ENTITIES. 2.1 THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASS ESSEE WAS NOT DEDUCTING ANY TDS ON RS. 1450/- PAID TO IT GYAN KENDR AS BY IT FOR EACH STUDENT. CONSEQUENTLY, A SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE FOR ABOVE MENTIONED YEARS AS TO WHY IT SHOULD NOT BE TREATED AS AN ASSESSEE IN DEFAULT IN THIS BEHALF. THE ASSESSEE RE PLIED THAT IT WAS NEITHER RUNNING ANY PROFESSIONAL OR TECHNICAL SERVI CES ON ITS OWN, IT WAS PART OF A COLLABORATION; THE PAYMENTS WERE MERE SHAR ING OF INTERSE REVENUE AND NOT ATTRIBUTABLE TO RENDERING OF ANY PR OFESSIONAL OR TECHNICAL SERVICES TO PAYEE COLLABORATOR. ON FURTHE R QUERIES IN THIS BEHALF, THE ASSESSEE VIDE LETTER DATED 14/11/2011 C ONTENDED AS UNDER:- THE LEARNER IS REQUIRED TO DEPOSIT THE ENTIRE COURS E FEE RS. 2300/- FOR RS-CIT WITH THE CONCERNED ITGK WHO RECEIV ES THE SAME ON BEHALF OF ALL THE STAKEHOLDERS AND ALSO ISS UES A RECEIPT FOR THE SAME. SUBSEQUENTLY THE ENTIRE COURSE FEE RE CEIVED FROM EACH LEARNER IS DEPOSITED BY THE ITGK IN THE BANK A CCOUNT OF THE RKCL FOR THE PURPOSE OF CENTRALIZED COLLECTION AND ONWARD DISTRIBUTION OF REVENUE SHARE OUT OF THE COURSE FEE AS PER THE COLLABORATION STIPULATIONS. THE AGGREGATE REVENUE OF RS. 2300/- IS SHARED AMONGS T THE FOLLOWING THREE STAKEHOLDERS IN THE FOLLOWING MANNER IN ITA 38,39 & 40/JP/2013_ ITO VS. RAJASTHAN KNOWLEDGE CORPORATION 4 ACCORDANCE WITH THE REVENUE SHARING AGREEMENTS/COLLA BORATION AGREEMENTS. S.NO . STAKEHOLDER REVENUE SHARE . (I) ITGK RS. 1450/- (II) RKCL RS. 750/- (III) VMOU RS. 100/- THIS TYPE OF STRUCTURE OF SINGLY POINT COLLECTION AN D SHARING OF REVENUE AMONGST THE VARIOUS STAKEHOLDERS HAS BEEN A DOPTED JUST FOR ADMINISTRATIVE PURPOSE/CONVENIENCE TO MAIN TAIN CHECK/CONTROL OVER THE AGGREGATE RECEIPT, NUMBER OF REGISTRATIONS, TIMING OF RECEIPT ETC. SO THAT ALL S TAKEHOLDER COLLABORATIVE PARTNERS RECEIVE THEIR RESPECTIVE SHA RE CORRECTLY AND ON TIME ALONGWITH THE ENTIRE INFORMATION ABOUT T HE LEARNERS REGISTRATION. VIII. LIABILITY FOR DEDUCTING OF TAX FROM PAYMENT O F SHARE TO ITGK IN FEES COLLECTION: (A) ITGK IS ONE OF THE COLLABORATING PARTNERS OF THE SAI D COURSES. THE ITGK IS ENTITLED TO ITS SHARE OF THE RS -CIT COURSE FEE BEING PAID BY A LEARNER, WHICH IS COLLECT ED BY ITGK ITSELF. ITGK IS NOT PROVIDING ANY KIND OF SERVIC ES TO THE RKCL. RATHER THE STRUCTURE OF THE PROJECT IS SU CH THAT THE ITGKS AND THE RKCL ALONGWITH VMOU INTER ALIA, HAV E COME TOGETHER TO PROMOTE E-LITERACY AMONG THE LEARN ERS IN THE STATE OF RAJASTHAN. THE LEARNERS IN TURN SHALL P AY THE COURSE FEE WHICH IS SHARED INTER ALIA, BETWEEN THE ITG KS AND THE RKCL FOR PERFORMING THEIR RESPECTIVE OBLIGATIONS/RESPONSIBILITIES TOWARDS THE LEARNER. THE SHARE OF AN ITGK BEING RS. 1450 PER LEARNER REPRESENTS AN ITA 38,39 & 40/JP/2013_ ITO VS. RAJASTHAN KNOWLEDGE CORPORATION 5 AMOUNT WHICH IS BEING DIVERTED/TRANSFERRED BY WAY OF OVERRIDING TITLE BEFORE EVEN COMING AT THE DISPOSAL OF THE RKCL. (B) AS A MATTER OF FACT, THE RECIPIENT OF THE FEE FROM THE LEARNER IS ALSO ITGK AND IT IS ONLY FOR THE ADMINIST RATIVE CONVENIENCE AND INTERNAL CHECK PURPOSES THAT THE REMITTANCE IS SENT FOR CENTRALIZED DISTRIBUTION TO THE RKCL. IT NEED NOT BE EMPHASIZED THAT THERE IS A DIFFERENC E BETWEEN RECEIPT OF INCOME AND REMITTANCE THEREOF. IN THE HANDS OF THE RKCL, NEITHER THE INCOME TO THE EXTENT OF RS. 1450/- IS RECEIVED NOT ACCRUED IN VIEW OF THE SCHEME , THEREFORE, THERE IS NO QUESTION OF THE RKCL PAYING THE AMOUNT OF RS. 1450/- TO THE ITGKS. IT IS JUST DISTR IBUTION OF INCOME WHICH CANNOT BE EQUATED WITH PAYMENT. (C) THUS, IN VIEW OF ABOVE, THIS BEING SHARING OF FEE, RK CL IS NOT LIABLE FOR DEDUCTION OF TAX AT SOURCE. 2.2 ASSESSEES REPLY DIDNT FIND FAVOR WITH THE ASSE SSING OFFICER, WHO HELD THAT THE ASSESSEE WAS LIABLE FOR DEDUCTION OF TD S U/S 194J OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) AND DEEMED T HE ASSESSEE IN DEFAULT FOR CORRESPONDING TDS AMOUNT U/S 201(1) OF T HE ACT AND FURTHER LIABLE FOR INTEREST U/S 201(1A) OF THE ACT. 3. AGGRIEVED, THE ASSESSEE PREFERRED FIRST APPEAL. THE LEARNED CIT(A) HELD THAT THE PROVISIONS OF SECTION 194J OF T HE ACT WERE NOT ITA 38,39 & 40/JP/2013_ ITO VS. RAJASTHAN KNOWLEDGE CORPORATION 6 APPLICABLE TO ASSESSEE AND ACCORDINGLY, THE DEMAND IN THIS BEHALF WAS DELETED BY FOLLOWING OBSERVATIONS: I HAVE CONSIDERED THE ORDER OF THE A.O. AND SUBMIS SIONS MADE BY THE AR OF THE APPELLANT. THE A.O. IS OF THE VIEW THAT THE COMPANY IS CARRYING OUT THE ACTIVITY OF EDUCATION, TRAINING AND ALLIED ACTIVITIES AND DELIVERING STATE OF THE ART I T SOLUTIONS AND IT ENABLES SERVICES TO THE COMMUNITY AT LARGE THROUG H VARIOUS SUPPORTING AGENCIES/CENTRES LIKE DLC, PSA AND ITGKS . THESE AGENCIES HAVE BEEN ENTRUSTED WITH IMPARTING COMPUTER TRAINING AND ARE BEING PAID FOR THEIR SERVICES/JOBS BY M/S R KCL. THEREFORE, THE APPELLANT WAS UNDER OBLIGATION TO DEDU CT TDS ON THESE TECHNICAL WORK PAYMENTS UNDER DIFFERENT SEC TIONS OF THE IT ACT. THE A.O. IS OF THE VIEW THAT THE APPELLANT HAS MADE PAYMENT TO IT GYAN KENDRAS PER HEAD/PERSON FOR TECHN ICAL EDUCATION BY THESE KENDRAS AND HAS WORKED THE TDS LIA BILITY @ 10.33% ON PAYMENTS OF SHARE IN RS-CIT COURSE FEES T O ITGK AND PAYMENT OF SHARE IN RS-CIT EXAM TO VARDHMAN MAHA VIR OPEN UNIVERSITY. THE A.O. HAS NOT EVEN SPECIFIED TH E SECTION UNDER WHICH THE TDS LIABILITY HAS BEEN WORKED OUT IN THE COMPUTATION ALTHOUGH IN THE SHOW CAUSE NOTICE REFERE NCE HAS BEEN MADE TO LIABILITY OF TDS U/S 194J OF THE ACT. FROM THE DETAIL SUBMISSIONS MADE BY THE A.R. OF THE APPELLANT AND THE COPY OF AGREEMENT FILED IT IS OBSERVED THAT : (I) THE APPELLANT I.E. RKCL HAS ENTERED INTO AGREEM ENTS WITH PSAS (PROGRAMME SUPPORT AGENCY), VMOU (VARDHMAN OPEN UNIVERSITY KOTA), DLCS (DISTRICT LEAD CENTRES) AND ITGLS ITA 38,39 & 40/JP/2013_ ITO VS. RAJASTHAN KNOWLEDGE CORPORATION 7 (INFORMATION TECHNOLOGY GYAN KENDRAS) THROUGH THE PS AS FOR IMPLEMENTATION OF VARIOUS PROFRAMMES RELATING TO E- LEARNING (RS-CIT AND OTHER COURSES) IN WHICH SPECIFIC RESPONSI BILITIES OF THE PARTIES AND THE MODALITIES OF THE SHARING OF RE VENUE BY THEM HAVE BEEN LAID OUT. THIS STRUCTURE HAS BEEN SU MMARIZED IN THE FLOW CHART IN PARA 4.2 ABOVE. (II) FROM THE AGREEMENTS BETWEEN THE PARTIES INVOLV ED IT IS CLEAR THAT THE DOMINANT INTENTION OF THE PARTIES WAS TO CONDUCT THE BUSINESS OF PROVIDING SPECIFIC E-LEARNI NG COURSES IN THE STATE OF RAJASTHAN AND SHARE THE REVENUE GENERA TED BY WAY OF FEES RECEIVED FROM THE LEARNERS. IN THIS REVE NUE SHARING MODEL, THE ENTIRE FEES (COURSE FEE/EXAM FEE) COLLEC TED FROM THE LEARNERS HAVE BEEN RECEIVED WITH THE APPELLANT THROU GH ITGKS, WHICH IS THEN REDISTRIBUTED TO OR SHARED WITH THE ITGK S AND VMOU AS PER THE AGREEMENT. FOR INSTANCE, THE AGGREG ATE REVENUE OF RS. 2300 FOR RS-CIT, COURSE WHICH IS RECEI VED BY THE ITGK FROM A LEARNER, IS TRANSFERRED TO THE APPEL LANT WHICH IS SHARED AMONG THE THREE STAKE HOLDERS AS UNDER: ITGK RS. 1450/- RKCL RS. 750/- VMOU RS. 100/- (III) THE TRANSACTIONS BETWEEN ITGK AND RKCL AND VMO U AND RKCL ARE NOT OF A SERVICE PROVIDER AND SERVICE RECEIVER. THE RELATION BETWEEN THESE PARTIES IS ONE OF COLLABOR ATORS AS PER THE AGREEMENTS MADE AND THE REVENUE SHARED CANN OT BE SAID TO BE PAYMENTS FOR TECHNICAL SERVICES RENDERED BY ITGKS AND VMOU, AS HELD BY THE A.O. ITA 38,39 & 40/JP/2013_ ITO VS. RAJASTHAN KNOWLEDGE CORPORATION 8 (IV) FOR THE ABOVE CONCLUSION, I ALSO DERIVE SUPP ORT FROM THE FOLLOWING CASE LAWS CITED BY THE APPELLANT AND DI SCUSSED IN PARA 4.2 ABOVE: (1) CIT VS. CAREER LAUNCHER INDIA LTD. CASE NO. (2 012) 20 TAXMAN.COM 637 OF HONBLE HIGH COURT OF DELHI. (2) CIT VS. NIIT LTD. (2009) 318 ITR 289 (DELHI). THE HONBLE DELHI HIGH COURT HAVE HELD IN THESE CASE S THAT THE DOMINANT INTENTION OF THE PARTIES, GATHERED FROM A COMPOSITE READING OF THE ENTIRE AGREEMENT AS A WHOLE, WAS TO CO NDUCT BUSINESS AND SHARE THE PROFITS AND THEREFORE THE TRI BUNAL WAS CORRECT IN LAW IN HOLDING THAT (A) THE ASSESSEE (NIIT/FRANCHISOR) WAS NOT LIABLE TO DEDUCT TAXES U/S 194I OF THE ACT IN RESPECT OF THE AMOUNT SHARED BY THE ASSESSEE AND REMITTED TO THE FRANCHISEE IN THE CASE OF CIT VS. NI IT LTD. AND (B) THE ASSESSEE (CAREER LAUNCHER/FRANCHISOR) WAS NO T LIABLE TO DEDUCT TAXES U/S 194C OF THE ACT IN RESPECT OF THE AMOUNT SHARED BY THE ASSESSEE AND REMITTED TO THE FRANCHIS EE IN THE CASE OF CIT VS. CAREER LAUNCHER LTD. IN VIEW OF ABOVE DISCUSSION, IT IS HELD THAT THE A.O . WAS NOT CORRECT IN HOLDING THAT THE TDS PROVISIONS OF SECTIO N 194J WAS APPLICABLE TO THE PAYMENTS, BEING SHARE IN RS-CIT CO URSE FEES, TO ITGK OR VMOU. THUS, THERE IS NO JUSTIFICATION FOR RAISING THE DEMAND FOR SHORT DEDUCTION OF TAX U/S 201(1) WITH RE SPECT TO THESE PAYMENTS. SINCE THERE WAS NO SUCH TAX LIABILIT Y UNDER SECTION 201(1), THERE IS NO JUSTIFICATION FOR FURTH ER RAISING INTEREST DEMAND U/S 201(1A) OF THE ACT. ACCORDINGLY , THE A.O. IS DIRECTED TO DELETE THE DEMAND RAISED OF RS. 2172 571/- AND ITA 38,39 & 40/JP/2013_ ITO VS. RAJASTHAN KNOWLEDGE CORPORATION 9 RS. 147658/- WITH REFERENCE TO PAYMENTS TO ITGK AND VMOU. THE GROUND NO. 2 AND 3 OF THE APPELLANT ARE ALLOWED. 4. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. TH E LEARNED D.R. RELIED ON THE ORDER OF THE LEARNED ASSESSING OFFICE R. 5. LEARNED COUNSEL FOR THE ASSESSEE ON THE OTHER HA ND, VEHEMENTLY CONTENDS THAT LD. AO HAS MISDIRECTED HIMSELF IN NOT APPRECIATING THE FACTS AVAILABLE ON RECORD AND CORRECT RELATIONSHIP OF THE PAYER AND PAYEE, THERE IS NO QUESTIONOF LIABILITY FOR TDS ON T HE ASSESSEE IN TERMS OF SEC 194J. ASSESSEE WAS PART OF A BUSINESS CONGLOM ERATE ALONG WITH OTHER ENTITIES INCLUDING UNIVERSITY MENTIONED ABOVE . FROM THE AGREEMENTS, WHICH ARE REFERRED TO DURING THE COURSE OF ARGUMENTS IT IS EMPHASIZED THAT A REVENUE SHARING MODEL WAS DEVISED BY THESE ENTITIES. IN CONSIDERATION OF THE CLAUSES OF AGREEM ENTS AND REVENUE SHARING MODEL, THE ASSESSEE IS NEITHER A SERVICE PR OVIDER NOR A SERVICE RECEIVER VIS A VIS THE PAYEE. THUS, THE PAYMENT WAS S HARED BY THE FRANCHISEES/COLLABORATORS AND THE ACT OF SHARING R EVENUE CANNOT BE TREATED AS RENDERING OF PROFESSIONAL OR TECHNICAL S ERVICES BY ANY STRETCH OF IMAGINATION. IN THE CASE OF CIT VS. CAREER LAUNC HER INDIA LTD. (SUPRA) SIMILAR TYPE OF PAYMENTS WERE HELD BY THE DE PARTMENT TO BE LIABLE FOR TDS U/S 194C I.E. IN THE NATURE OF CONTRA CT PAYMENTS. THE ITA 38,39 & 40/JP/2013_ ITO VS. RAJASTHAN KNOWLEDGE CORPORATION 10 HONBLE DELHI HIGH COURT AFTER DETAILED CONSIDERATI ON OF FACTS AND VARIOUS CASE LAWS, CAME TO THE CONCLUSION THAT SUCH REVENUE SHARING PAYMENTS ARE NEITHER LIABLE FOR 194C I.E. CONTRACT PAYMENTS NOR THE PROVISIONS OF SECTION 40A(IA) OF THE ACT WERE APPLI CABLE TO SUCH PAYMENTS BY FOLLOWING OBSERVATIONS: 41. WE ARE NOT REFERRING IN DETAIL TO THE JUDGMENT OF THIS COURT IN CIT VS. NIIT LTD. (SUPRA) CITED ON BEHALF OF THE ASSESSEE BECAUSE THAT CASE WAS CONCERNED WITH THE PRO VISIONS OF SECTION 194I OF THE ACT. HOWEVER, ON GOING THROUG H THE JUDGMENT WE FIND THAT THERE ARE OBSERVATIONS THEREIN TO THE EFFECT THAT A FRANCHISEE AGREEMENT CANNOT BE BROKEN UP INTO SEVERAL PARTS TO BRING IT WITHIN THE TDS PROVISIONS A ND THAT THE DOMINANT INTENTION OF THE PARTIES TO THE AGREEMENT SHOULD BE RESPECTED AND GIVEN EFFECT TO, AS GATHERED FROM THE COMPOSITE AGREEMENT. IT IS SIGNIFICANT TO NOTE THAT IN THAT C ASE THE ASSESSEE (NIIT) WAS ENGAGED IN THE BUSINESS OF PROVID ING COMPUTER EDUCATION AND TRAINING THROUGH ITS OWN CEN TRES AND ALSO THROUGH FRANCHISEES, WHO WERE PROVIDING NIIT COUR SES UNDER LICENSES FROM THE ASSESSEE. THE OTHER TERMS OF THE FRANCHISEE AGREEMENT, WHICH HAVE BEEN REFERRED TO I N THE JUDGMENT, SHOW THAT AS IN THE PRESENT CASE, IN THAT CASE ALSO THE NIIT WAS TO PROVIDE THE RELEVANT COURSE MATERIAL AND EXPERTISE IN PROVIDING COMPUTER EDUCATION TO THE FR ANCHISEES, THAT IT WAS THE RESPONSIBILITY OF THE FRANCHISEES TO SET UP INFRASTRUCTURE FACILITIES SUCH AS CLASS ROOM, EQUIP MENT, ITA 38,39 & 40/JP/2013_ ITO VS. RAJASTHAN KNOWLEDGE CORPORATION 11 FURNITURE, ADMINISTRATIVE SET UP ETC. AND ALSO TO O PERATE AND MANAGE THE EDUCATION CENTRE ON DAY-TO-DAY BASIS ETC . ITA 939/2010, 911/2011 & 926/2011 PAGE 30 OF 36 IN THAT CASE IT WAS ALSO ONE OF THE TERMS OF THE FRANCHISEE AGREEMEN T THAT FEES COLLECTED FROM THE STUDENTS BY THE FRANCHISEES WERE TO BE DEPOSITED IN THE ACCOUNT OF THE ASSESSEE AND WERE TH EREAFTER TO BE SHARED WITH THE FRANCHISEES IN ACCORDANCE WITH THE FRANCHISEES IN ACCORDANCE WITH THE FRANCHISE/LICENSE AGREEMENT. ON THESE FACTS, IT WAS HELD BY THE DIVISI ON BENCH OF THIS COURT THAT THE DOMINANT INTENTION OF THE PARTI ES, GATHERED FROM A COMPOSITE READING OF THE ENTIRE AGREEMENT AS A WHOLE, WAS TO CONDUCT BUSINESS AND SHARE THE PROFITS. THE RA TIO OF THIS JUDGMENT EQUALLY APPLIES TO THE FACTS OF THE PRESEN T CASE DESPITE THE FACT THAT A DIFFERENT TDS PROVISION HAS BEEN INVOKED BY THE INCOME TAX AUTHORITIES IN THE PRESEN T CASE. 42. FOR THE ABOVE REASONS WE HOLD THAT THE CONCLUS ION ARRIVED AT BY THE TRIBUNAL CANNOT BE DISTURBED. THE TR IBUNAL WAS RIGHT IN LAW IN HOLDING THAT THE PROVISIONS OF SE CTION 194C AND SECTION 40(A)(IA) ARE NOT APPLICABLE TO THE FAC TS OF THE CASE. WE ACCORDINGLY, ANSWER THE SUBSTANTIAL QUESTIO N OF LAW IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE FOR BOTH THE YEARS. IT IS PLEADED THAT THE HONBLE DELHI HIGH COURT HAS GIVEN A CLEAR FINDING THAT THE REVENUE SHARING PAYMENTS BETWEEN THE FRANCH ISEES ARE MODICUM OF SHARING REVENUE AND CANNOT BE HELD AS LI ABLE TO TDS. IN ITA 38,39 & 40/JP/2013_ ITO VS. RAJASTHAN KNOWLEDGE CORPORATION 12 CAREER LAUNCHER CASE, THE PAYMENTS WERE HELD LIABLE U/S 194C OF THE ACT WHEREAS IN ASSESSEES CASE A MORE STRINGENT AND ARBITRARY VIEW HAS BEEN TAKEN BY THE ASSESSING OFFICER. THUS, THE LEARN ED ASSESSING OFFICER FAILED TO APPRECIATE THE BASIC FACTS ON REC ORD THAT THE IMPUGNED PAYMENTS WERE NOT ON ACCOUNT OF RENDERING ANY SERVIC ES IN TERMS OF SEC. 194J, THE WERE MERE INTRA ENTITY PAYMENTS CONSE QUENT TO REVENUE SHARING ARRANGEMENTS UNDER A VALID MULTI ENTITY BUS INESS MODULE. LEARNED CIT(A) AFTER DETAILED EXAMINATION OF FACTS, RECORD, AGREEMENTS AND JUDICIAL ANALYSIS HAS PASSED A DETAILED ORDER, THERE BEING NO INFIRMITY THEREIN, IT DESERVES TO BE UPHELD . 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE CO NTENTS OF THE AGREEMENTS REFERRED TO BY THE ASSESSEE, PLACED ON T HE RECORD, HAVE NOT BEEN DISPUTED BY THE DEPARTMENT. THUS, THE UNCONTRO VERTED FACT WHICH EMERGES FROM THE RECORD IS TO THE EFFECT THAT THE P AYMENTS IN QUESTION WERE NOT MADE BY ASSESSEE QUA ANY SERVICE OF PROFESS IONAL OR TECHNICAL NATURE RENDERED TO THE PAYEE. ALL THE ABOVE ENTITIE S BY A VALID COLLABORATION, FORMED A BUSINESS MODULE ON THE REVE NUE SHARING BASIS FOR IMPARTING COMPUTER EDUCATION TO RAJASTHAN GOVT EMPLOYEES AND OTHERS. THE SERVICES IF ANY WERE PROVIDED TO THE STU DENTS AND THE THE ITA 38,39 & 40/JP/2013_ ITO VS. RAJASTHAN KNOWLEDGE CORPORATION 13 PAYEE IN QUESTION. THE NATURE OF INTERNAL DISTRIBUT ION OF REVENUE BASED ON THE MUTUAL AGREEMENTS CANT BE HELD TO BE RENDER ING OF PROFESSIONAL OR TECHNICAL SERVICES BY ANY STRETCH OF IMAGINATION . WE FIND MERIT IN THE ERUDITE CONTENTIONS OF LD. COUNSEL FOR THE ASSESSEE . OUR VIEW IS REINFORCED BY HONBLE DELHI HIGH COURT JUDGMENT IN THE CASE OF CAREER LAUNCHERS, THE ACT OF SHARING OF REVENUE IN A MULTI ENTITY BUSINESS MODEL CANNOT BE HELD AS CONTRACT PAYMENTS AND TAKIN G THE LOGIC FURTHER THEY CANNOT BE HELD AS PAYMENTS ON ACCOUNT OF RENDE RING OF ANY PROFESSIONAL OR TECHNICAL SERVICES AS CONTEMPLATED BY SECTION 194J OF THE ACT. IN VIEW THEREFORE, WE FIND NO INFIRMITY IN T HE IMPUGNED ORDERS OF THE LEARNED CIT(A), WHICH ARE UPHELD. 7. IN THE RESULT, ALL THE THREE REVENUES APPEALS A RE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13/02/2015. SD/- SD/- VH-VKJ-EHUK VKJ-IH-RKSYKUH (T.R. MEENA) (R.P.TOLANI) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ @ JAIPUR FNUKAD @ DATED:- 13 TH FEBRUARY, 2015 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- THE ITO, TDS-2, JAIPUR. ITA 38,39 & 40/JP/2013_ ITO VS. RAJASTHAN KNOWLEDGE CORPORATION 14 2. IZR;FKHZ @ THE RESPONDENT- M/S RAJASTHAN KNOWLEDGE CORPORATION LIMITED, JAIPUR. 3. VK;DJ VK;QDRVIHY @ THE CIT(A), ALWAR. 4. VK;DJ VK;QDR @ CIT, JAIPUR 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NOS. 38, 39 & 40/JP/2013) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR