M/s. DYNAMIC COURSES & CAREER CENTRE P. LTD., MUMBAI V. DCIT Rg. - 3(1), MUMBAI

ITSSA 7/MUM/2006

• Counselvise Citation: [2012] 121 COUNSELVISE.COM (IT) 8549 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 21-11-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 22-10-2012
• Assessment Year: misc
• Appeal Filed On: 05-01-2006
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S D SRIVASTAVA
• Assessee Lawyers: SUBHAS S SHETTY
• Keywords: Permanent establishment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J, MUMBAI BEFORE SHRI R. S. SYAL, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ITSS NO. 7/MUM/2006 BLOCK PERIOD 1.4.1996 TO 29.01.2003 DYNAMIC COURSES AND CAREER PVT. LTD., 3/35, KAMAL MANSION, A.B. ROAD, COLABA, MUMBAI -400 005 VS DY. COMMISSIONER OF INCOME-TAX, RANGE- 3(1), MUMBAI (APPELLANT) (RESPONDENT) ITA NO. 91/MUM/2006 (ASSESSMENT YEAR: 2002-03) DYNAMIC COURSES AND CAREER PVT. LTD., MUMBAI -400 005 PAN: AAACD 2179 G VS DY. COMMISSIONER OF INCOME-TAX, RANGE- 3(1), MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUBHAS S. SHETTY RESPONDENT BY : SHRI S.D. SRIVASTAVA DATE OF HEARING: 22.10.2012 DATE OF PRONOUNCEMENT: 21.11.2012 O R D E R PER VIVEK VARMA, JM: THE APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) XXVIII, MUMBAI, DATED 11.11.2005. 2. THE ASSESSEE HAD FILED GROUNDS OF APPEAL ALONG WITH TH E APPEAL FILED ON 05.01.2006, WHEREIN THE ASSESSEE HAD TAKEN SIX GR OUNDS. LATER ON, THE ASSESSEE FILED REVISED GROUNDS OF APPEAL IN S UBSTITUTION OF THE ORIGINAL GROUNDS, WHICH ARE BEING TAKEN UP FOR ADJUDICA TION. THE REVISED GOA ARE AS FOLLOWS : 1) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) COMMITTED A GROSS ERROR OF LAW & FACTS IN CONFIRMING THE ADDI TION OF RS. DYNAMIC COURSES AND CAREER PVT. LTD. ITSS 7/MUM/2006 ITA 91/MUM/2006 2 4,95,493/- MADE BY THE ASSESSING OFFICER, BEING THE TOTAL OF ENTRIES IN THE SEIZED MATERIALS OF THE NEGATIVE CAS H BALANCES RECORDED ON THE VARIOUS DATES. 2) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) GROSSLY ERRED IN SUSTAINING THE ADDITION TO THE EXTEND OF R S. 78,000/- ON THE GROUND OF ALLEGED CASH PAYMENT OF INTEREST TO M S. SADHANA KATARA. APPELLANT CRAVES LEAVE TO ADD/ALTER/AMEND THE ABOVE GROUNDS OF APPEAL. 3. AT THE TIME OF HEARING, THE AR OF THE ASSESSEE CONCED ED AND PREFERRED TO NOT TO PRESS BOTH THE GROUNDS. 4. SINCE THE GROUNDS ARE NOT PRESSED, THE APPEAL FILED B Y THE ASSESSEE IS DISMISSED. ITA NO. 91/MUM/2006 ASSESSMENT YEAR 2002-03 5. THE APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) XXVIII, MUMBAI, DATED 11.11.2005, FOR ASSESSMENT YEAR 20 02-03, WHEREIN THE ASSESSMENT WAS FRAMED U/S 143(3). 6. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1) ON THE FACTS AND CIRCUMSTANCES OF CASE THE LEARN ED COMMISSIONER OF INCOME TAX(APPEAL) COMMITTED A GROS S ERROR IN CONFIRMING THE ADDITIONS OF INCOME OF RS. 2660935/- MADE BY THE LEARNED ASSESSING OFFICER ON ACCOUNT OF PAYMENT OF IATA FEES AND VIASINC FEES TOWARDS EXAMINATION FEES WITH OUT DEDUCTION OF TDS. 2) THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) ERRED IN NOT APPRECIATING THE FACT THAT THESE PAYMENT WERE D ONE ON BEHALF OF STUDENT AND IN THEIR OWN NAME AND APPELLA NT IS JUST A CO-ORDINATOR FOR FACILITATING THESE PAYMENT AND THE SE AMOUNT DOESNT BELONGS TO APPELLANT. 3) ON THE FACT AND CIRCUMSTANCES OF THE CASE THE LE ARNED COMMISSIONER OF INCOME TAX (APPEAL) COMMITTED GROSS ERROR IN CONFIRMING THE ADDITION OF RS. 150000/- MADE BY THE LEARNED ASSESSING OFFICER ON ACCOUNT OF TRAVELLING EXPENSES DEBITED BY THE APPELLANT. 4) APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND TH E ABOVE GROUNDS OF APPEAL AS AND WHEN NECESSARY. 7. AT THE TIME OF HEARING, THE AR POINTED OUT THAT GRO UNDS NO. 1 & 2 ARE SIMILAR TO GROUNDS NO. 1, 2, 3 & 4, TAKEN BY THE ASS ESSEE IN ITS DYNAMIC COURSES AND CAREER PVT. LTD. ITSS 7/MUM/2006 ITA 91/MUM/2006 3 OWN CASE IN THE PRECEDING YEAR, IN ITA NO. 9262/MUM/2004 , WHICH ARE AS FOLLOWS: 1. THE LD. CIT(A) COMMITTED A GROSS ERROR OF LAW A ND FACT IN CONFIRMING THE DISALLOWING RS.2133358/- MADE BY THE ASSESSING OFFICER U/S.40(A)(I) OF THE I. T. ACT, 19 61. 2. THE LD. CIT(A) GROSSLY ERRED IN NOT APPRECIATIN G THAT THE PROVISIONS OF SECTIONS 40(A)(IA) RWS 195 IS NOT ATT RACTED TO THE IMPUGNED TRANSACTION IN AS MUCH AS THE AFORESAID SU M IS NOT CHARGEABLE UNDER THE PROVISIONS OF THE ACT. 3. THE LD. CIT(A) ERRED IN NOT APPRECIATING THAT TH E IMPUGNED AMOUNT IS REMITTED OUTSIDE INDIA IN THE IN DIVIDUAL NAMES OF STUDENTS ON ACCOUNT OF REGISTRATION FEE, E XAMINATION FEE AND KIT MATERIALS FEE PAYABLE TO THE FOREIGN IN STITUTIONS. 4. THE LD. CIT(A) ERRED IN FAILING TO APPRECIATE TH AT THE APPELLANT IS ACTING MERELY AS A CONDUIT IN FACILITA TING THE REMITTANCE OF THE FEES TO THE FOREIGN INSTITUTION O N BEHALF OF IF STUDENT, AS A SERVICE TO THE STUDENTS WITHOUT ANY P ROFIT ELEMENT OR MOTIVE. 8. THE AR POINTED OUT THAT THE ISSUE HAS BEEN DEALT WIT H BY THE COORDINATE BENCH IN PARA 6 AND 7 OF THE ORDER, WHEREIN IT HAS BEEN HELD, 6. THE POINTS FOR CONSIDERATION IN THIS APPEAL ARE :- I) WHETHER THE FEES PAID TO IATA AND VIASINC ARE INCOME OF THESE ORGANIZATIONS; II) WHETHER THE INCOME OF THE SAID ORGANIZATIONS ARE TAXABLE IN INDIA III) WHO IS THE PERSON RESPONSIBLE TO PAY THE FEE IV) WHETHER THE ASSESSEE IS LIABLE TO DEDUCT TAX A T SOURCE WHILE MAKING REMITTANCE OF FEE TO THE ABOVE NON RESIDENT ORGANIZATIONS. AS REGARDS THE POINT NO.1, IT IS TO BE NOTED THAT E VERY FEE OR EVERY RECEIPT WILL NOT AMOUNT TO INCOME. THE REC EIPT OF ANY AMOUNT HAS TO BE PURSUANT TO ANY SERVICES BEING RENDERED BY THE SAID ORGANIZATIONS IN INDIA. THE ORGANIZATIONS DO NOT HAVE ANY PERMANENT ESTABLISHME NT IN INDIA. THEY ARE ONLY THE ACCREDITING INSTITUTION S GRANTING THE CERTIFICATE TO THE STUDENTS, WHO GET T HE TRAINING FROM THE INSTITUTES SUCH AS THE ASSESSEE. THEREFORE, IT CAN NOT BE SAID THAT THESE ORGANIZATI ONS ARE RENDERING ANY SERVICES IN INDIA AND THEREFORE, THE FEES PAID TO THESE ORGANIZATIONS FOR GRANTING THE CERTIF ICATE WOULD NOT AMOUNT TO THE INCOME ARISING OR ACCRUING TO THEM IN INDIA DURING THE RELEVANT ASSESSMENT YEAR. 7. AS REGARDS POINT NO.2, IT IS SETTLED POSITION TH AT IN THE ABSENCE OF ANY PERMANENT ESTABLISHMENT IN INDIA OR ANY BUSINESS CONNECTION IN INDIA, THE INCOME OF THESE ORGANIZATIONS ARE NOT TAXABLE IN INDIA. AS REGARDS POINT NO.3, THE TAX IS TO BE DEDUCTED AT SOURCE BY THE PE RSON RESPONSIBLE TO PAY THE AMOUNTS TO THE NON-RESIDENT. SECTION 204(III) OF THE I.T. ACT DEFINES THE PERSON RESPONSIBLE FOR PAYING OF ANY OTHER SUM OTHER THAN THOSE SPECIFIED IN CLAUSE (I) (II) (IIA), UNDER THE PROVI SIONS OF I. T. DYNAMIC COURSES AND CAREER PVT. LTD. ITSS 7/MUM/2006 ITA 91/MUM/2006 4 ACTS, AS THE PAYER HIMSELF, OR IF THE PAYER IS A C OMPANY, THE COMPANY ITSELF INCLUDING THE PRINCIPAL OFFICER THEREOF. IN THIS CASE, THE ASSESSEE IS NOT THE PERSON RESPON SIBLE FOR PAYING THE FEES TO THE NON-RESIDENT ORGANIZATIO N. IT IS THE STUDENTS, WHO ARE RESPONSIBLE TO PAY THE FEE TO THE ACCREDITING ORGANIZATIONS AND THE ASSESSEE IS ONLY AN AGENT OF THE STUDENTS. THE NEXT QUESTION THAT ARISE S FOR CONSIDERATION IS WHETHER THE STUDENTS ARE LIABLE TO DEDUCT TAX AT SOURCE WHILE MAKING PAYMENTS TO THESE ORGANIZATIONS? AS WE HAVE HELD IN POINT NO.1 ABOVE, EVERY RECEIPT IS NOT INCOME AND THE PAYMENT OF FEE CAN NOT BE HELD AS THE INCOME OF THE INTERNATIONAL ORGANIZATIONS AND THE STUDENTS ARE NOT LIABLE TO DE DUCT THE TAX AT SOURCE. WHEN THE PRINCIPAL, I.E. STUDENT S ARE THEMSELVES ARE NOT LIABLE TO DEDUCT TAX AT SOURCE, THE AGENT OF THE STUDENTS I.E. ASSESSEE HEREIN HAVE NO LIABLE TO DO SO. IN THESE CIRCUMSTANCES, WE ARE UNABLE TO SUSTAIN THE ADDITIONS MADE BY THE ASSESSING OFFICER AS CONFIRMED BY THE CIT(A). CONSEQUENTLY, WE DELETE TH E ADDITIONS MADE BY THEM AND THE ASSESSEES GROUNDS O F APPEAL NO.1 TO 4 ARE ALLOWED. 9. THE AR, THEREFORE, PLEADED THAT SINCE THE FACTS ARE IDE NTICAL, THE ISSUE IN QUESTION IS FULLY COVERED BY THE COORDINATE BENCH IN THE ASSESSEES OWN CASE IN THE IMMEDIATELY PRECEDING YEAR. 10. THE DR ACCEPTED THE SUBMISSIONS MADE BY THE AR, HO WEVER, THE DR REFERRED TO THE CASE OF TRANSMISSION CORPORATION OF A.P . LTD VS CIT, REPORTED IN 239 ITR 587 (SC) AND STRONGLY RELIED ON THE ORDER OF THE AO. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE GONE THROUGH THE ORDER OF THE COORDINATE BENCH IN THE ASSESSEE OWN CASE IN IMMEDIATE PRECEDING YEAR. WE FIND THAT THE DECISION RENDERED BY TH E HONBLE COORDINATE BENCH IS IDENTICAL ON FACTUAL ASPECT. WE FIND THA T DECISION OF THE HONBLE APEX COURT IS DISTINGUISHABLE ON FACTS, BECAU SE, THE ISSUE BEFORE IS ON THE EXPENSES, WHICH IS OTHERWISE ALLOWAB LE IN NATURE AND THE ISSUE BEFORE THE HONBLE SUPREME COURT WAS ANY OTHER SUM CHARGEABLE UNDER THE PROVISIONS OF THIS ACT , AS PER U/S 195 OF THE ACT. IN OUR CONSIDERED OPINION, THE FACTS INVOLVED BEING DISTINGUISHABLE, WILL NOT COME IN AID TO THE DEPARTMENT IN THE PRESENT SET O F CIRCUMSTANCES DYNAMIC COURSES AND CAREER PVT. LTD. ITSS 7/MUM/2006 ITA 91/MUM/2006 5 AND AS ADJUDICATED BY THE COORDINATE BENCH IN ASSES SMENT YEAR 2001-02. WE, THEREFORE, REJECT THE CONTENTION OF THE DR. 12. RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BEN CH IN ITA NO. 9262/MUM/2004, WE ALLOW GROUNDS NO. 1 & 2. 13. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) AND D IRECT THE AO TO DELETE THE ADDITION MADE. 14. GROUND NO. 3 IS NOT PRESSED HENCE IT IS REJECTED. 15. GROUND NO. 4 IS GENERAL. 16. IN THE RESULT, APPEAL IN ITSS NO. 7 OF 2006 STANDS DISMISSED AND THAT IN ITA NO. 91 OF 2006 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 21/11/2012. SD/- (R. S. SYAL) ACCOUTANT MEMBER SD/- (VIVEK VARMA) JUDICIAL MEMBER MUMBAI, DATE: 21/11/2012 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)- XXVIII , MUMBAI. 4) THE CIT -3, MUMBAI, 5) THE D.R. J BENCH, MUMBAI. 6) COPY TO GUARD FILE. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN