ACIT (TDS), JAIPUR vs. GNADHI VIDHYA MANDIR, CHURU

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR Jh dqy Hkkjr] U;kf;d lnL; ,oa Jh foØe flag ;kno] ys[kk lnL; ds le{k BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA No. 1016/JP/2015 fu/kZkj.k o"kZ@Assessment Year : 2012-13 cuke The Asstt. Commissioner of M/s Gandhi Vidhya Mandir, Vs. Income Tax (TDS), Jaipur GVM Road, Sardarshahar, Churu LFkk;h ys[kk la-@thvkbZvkj la-@PAN No. vihykFkhZ@Appellant izR;FkhZ@Respondent vk;dj vihy la-@ITA No. 1017/JP/2015 fu/kZkj.k o"kZ@Assessment Year : 2013-14 cuke The Asstt. Commissioner of M/s Gandhi Vidhya Mandir, Vs. Income Tax (TDS), Jaipur GVM Road, Sardarshahar, Churu LFkk;h ys[kk la-@thvkbZvkj la-@PAN No. vihykFkhZ@Appellant izR;FkhZ@Respondent

fu/kZkfjrhdh vksj ls@Assessee by : Shri M.L. Borad (Advocate) jktLo dh vksj ls@Revenue by : Shri Anil Kumar (CIT) lquokbZ dh rkjh[k@Date of Hearing : 06.12.2016 ?kks"k.kk dh rkjh[k@Date of Pronouncement: 31/01/2017. vkns'k@ORDER PER SHRI VIKRAM SINGH YADAV, A.M. These are common appeals against the order of ld. CIT(A)-3, Jaipur dated 16.10.2015 for Assessment Years 2012-13 & 2013-14. Since common grounds are involved in both these appeals, the same were heard together and

ITA Nos. 1016 & 1017/JP/15 ACIT, (TDS), Jaipur vs. Gandhi Vidya Mandir, Churu disposed off by this consolidated order. The common ground of appeal taken by the Revenue in both the appeals is as under:

“On the facts and circumstances of the case, the ld. CIT(A) has erred in treating the payment made by the assessee to its study centres as revenue sharing and thereby relying on decision of RKCL vs. CIT(ITAT, Jaipur) and CIT vs. Career Launcher (Delhi High Court), whereas the face of this case is different from these cases.” 2. The brief facts of the case are that the assessee is a society engaged in providing education by running schools, colleges, vocational centre etc. Apart from the above, the assessee has a deemed University affiliated under the University Grants Commission Act, 1956 named as Institute of Advanced Studies in Education (“IASE University”). The IASE university is the core constituent of the assessee entrusted with the higher education portfolio. The Distance Education Program of IASE University is managed by the respondent assessee through 217 Counselling/Study Centers all over India.

2.1 During the course of assessment proceedings u/s.201(1)/201(1A) of the Income Tax Act, 1961, it was noticed by the Assessing Officer that payment of Rs.65,17,56,560/- for financial year 2011-12 & Rs.40,49,97,468/- (till 27.02.2013) for the financial year 2012-13 was made to the Study Centres and the respondent assessee was deducting TDS U/s. 194C on payments made to these Study Centres whereas the assessee deductor was required to deduct TDS u/s. 194J of the I.T. Act on payments made to study centres. Accordingly, the respondent assessee was issued a show cause notice by the A.O. as to why assessee should not be considered to be an assessee in default for short deduction of TDS as the payment made to the Study Centres was in the nature of technical services as envisaged u/s 194J and not in the nature of a contract u/s 194C. In response to the said show-cause notice, the respondent assessee

ITA Nos. 1016 & 1017/JP/15 ACIT, (TDS), Jaipur vs. Gandhi Vidya Mandir, Churu submitted its objections and reply whereby it argued that on the facts and circumstances of its case, provisions of Section 194J cannot be made applicable to it. However, the AO did not agree with the objection of the respondent assessee and given a finding that the services provided by the study centre to the assessee are in the nature of technical and managerial services and held the respondent assessee to be an “assessee-in-default” under section 201(1) of the Act read with Section 201(1A) of the Act. The amounts for which the appellant was held to be an assessee in default are tabulated hereunder:

Sr. No. Assessment U/s 201(1) U/s 201(1A) Total Year i) 2012-13 5,21,40,522/- 1,55,06,381/- 6,76,46,903/- ii) 2013-14 3,23,99,797/- 57,32,437/- 3,81,32,235/- Total 8,45,40,319/- 2,12,38,818/- 10,57,79,138/-

2.2 Being aggrieved, the assessee carried the matter in appeal for both the years before the Learned CIT(A). The ld CIT(A) held that the assessee was not required to deduct TDS u/s 194J of the Act and deleted the demand raised by the AO. The relevant findings of ld CIT(A) are reproduced as under:

“On going through the detailed submission of the appellant and case laws cited, I find that the Hon’ble Delhi High Court in case of CIT vs. Career Launcher India Ltd. 358 ITR 179 and CIT vs. NIIT Ltd., 318 ITR 289 where the facts are similar held that these arrangements are in the nature of share of profit not liable to TDS u/s 194J. Similarly Hon’ble ITAT Jaipur Bench in the case of ITO vs. M/s Rajasthan Knowledge corporation Ltd. vide order dated 13.03.2015 held as under: “Thus the uncontroverted fact which emerges from the record is to the effect that the payments in question were not made by assessee quo any service of professional or technical nature rendered to the payee. All the 3

ITA Nos. 1016 & 1017/JP/15 ACIT, (TDS), Jaipur vs. Gandhi Vidya Mandir, Churu above entries by a valid collaboration formed a business module on the revenue sharing basis for imparting computer education to Rajasthan Govt. Employees and others. The services if any were provided to the students and the payee in question. The nature of internal distribution of revenue based on the mutual agreements can’t be held to be rendering 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 Hon’ble Delhi High court judgement 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 taking the logic further they cannot be held as payments on account of rendering of any professional or technical services as contemplated by section 194J of the Act. In view therefore, we find no infirmity in the impugned orders of the learned CIT(A), which are upheld.” Respectfully following the decision of Hon’ble ITAT, Jaipur Bench & Delhi High Court, I find that since the fact of the present case are same, assessee is not required to deduct TDS u/s 194J for both the years. Accordingly the demand raised for short deduction of TDS u/s 194J for both the years is deleted. The interest levied u/s 201(1A) is consequential & will reduce accordingly.”

ITA Nos. 1016 & 1017/JP/15 ACIT, (TDS), Jaipur vs. Gandhi Vidya Mandir, Churu (ii) The said arrangement are neither arrangements of the university nor arrangements on behalf of the university. The fees collected from the students are credited to the bank account. In lieu of the authorization out of the course fees received from the students, 50% is retained by assessee and 50% is remitted to the study centres. In fact the agreement is for sharing of revenue. (iii) It is submitted that the study centres are run, managed and operated by the person owning the study centres and they are not run, managed and operated by assessee or on behalf of the assessee. (iv) According to the various clauses of Norms and Guidelines of agreements, it is very clear that this is a case of Revenue sharing whereby both the parties to this agreement perform their defined jobs and share revenue accordingly. The appellant IASE University is engaged in imparting education through its designated study centres. Under the various clauses of the agreement, the study centres collects fees from the students and send the full amount to the University which in turn after keeping its 50% share of course fees send back the remaining 50% to the study centres. This type of structure of single point collection and sharing of revenue has been adopted mainly for the benefit of students so that they should not be charged excessively by the study centres. It also helps in maintaining proper control/check over the collection of fees and it’s sharing. As a matter of fact, the recipient of the fee from the students are study centres only and for internal check and administrative convenience only it is sent to the IASE university. It need not be emphasized that there is a difference between receipt of income and “remittance thereof. In fact, the appellant is just remitting the share of study centres to them therefore, there is no question arise at all for providing any services by the study centres. This is purely a revenue sharing agreement and accordingly there is no need to deduct TDS at all. It is thus submitted that there is no “service” being provided by the study (v) centre to the university. On the contrary, service is provided by study centre to students, as would be evident from clause 44, wherein it has been stated as under :

ITA Nos. 1016 & 1017/JP/15 ACIT, (TDS), Jaipur vs. Gandhi Vidya Mandir, Churu “ A sum of 50% of the course fee will be paid to the Centre subject to the satisfactory support services provided by the centre to the student in terms of library, labs, practical and theory classes, training etc.” (vi) The appellant seeks to refer to section 194J of the Act, which provide as under : “Fees for professional or technical services Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any sum by way of- (a) fees for professional services, or (b) fees for technical services, (ba) any remuneration or fees or commission by whatever name called other than those on which tax is deductible under section 192 to a director of a company, or (1) (c) royalty, or (2) (d) any sum referred to in clause (va) of section 28,

Shall at the time of credit of such sum to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to ten percent of such sum as income-tax on income comprised therein.”

A perusal of the above section would show that the said section comes into operation inter-alia when any person is responsible for making payment to a resident any sum by way of “fees for technical services”. The expression “fee for technical services” has been defined in explanation 2 to clause (vii) of section 9(1) of the Act as under: “ Explanation: For the purpose of this clause, “ fees for technical services” means any consideration ( including any lump sum consideration) for the rendering of any managerial, technical or consultancy services ( including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head “ salaries.”

ITA Nos. 1016 & 1017/JP/15 ACIT, (TDS), Jaipur vs. Gandhi Vidya Mandir, Churu It is thus evident that fees for technical services means any consideration for rendering of any managerial, technical or consultancy services. It is submitted and as contended above that since no services have been provided by the study centres to respondent assessee, section 194J of the Act has no application on the facts of the respondent society. The appellant also derives supports from circular No. 715 dated 8th (vii) August,1995 wherein CBDT has held that the true content or intention must be gleaned on a proper construction of the arrangement. In such circumstances, it is submitted thatdominant intention of the parties was to share revenue. (viii) It is submitted that the statement of the study centres has been recorded behind the back of the assessee and has not been confronted during the proceedings and also no show cause has been issued in this regards hence as such, it cannot be relied upon as held in Kishnichand Chellaram vs. CIT (125 ITR 713).The appellant also submits mere fact that another university is deducting rate @ 10% cannot be basis to allege TDS should be deducted @ 10% when the same is neither factually nor legally warranted on the facts of the appellant. It is reiterated here though at the risk of repetition that there is no estoppel against statute. (ix) Apart from the above, it is submitted that there is nothing incriminating in the statement of study centres so as to allege that study centre is providing either technical or managerial services to the appellant. It is submitted on the contrary the learned Assessing officer has framed his questions so as to assume that services have been provided by the study centre to the appellant. This is evident from Question no. 5 and Question no. 10 of the aforesaid statement. Infact despite the above, he has clarified that study centre only provide counselling to students and resolves the issues faced by the students enrolled with the appellant university, thus making the appellant’s ground more strong that the study centres are not providing services to the university but to the students and thus there is no relation exists of service receiver and service provider and accordingly section 194J cannot be invoked. Thus, it is the submission of the appellant that such a statement in absence of any other material cannot be a ground to invoke the provisions contained in section 194J of the Act.

ITA Nos. 1016 & 1017/JP/15 ACIT, (TDS), Jaipur vs. Gandhi Vidya Mandir, Churu (x) It is submitted that no basis has been stated by the learned. A.O. for assuming that study centres authorized by the appellant were providing technical, managerial and consultancy services. 4. The ld AR further relied upon certain judicial precedents and submitted that: 4.1 The arrangements between the respondent University and the study centres is of sharing of profits and not provision of service. As such the issue is covered by decision in Career Launcher India Ltd. Vs. ACIT reported in 139 TTJ 48 (Del) upheld by Hon’ble High Court of Delhi in the case of Commissioner of Income Tax Vs. Career Launcher India Ltd. reported in 358 ITR 179 (Delhi). The narrow controversy involved in the above appeal related to liability to deduct TDS u/s.194J of the Act on payments made to study centres. In the above mentioned decision of Delhi Bench of Hon’ble Tribunal in the case of Career Launcher India Ltd. Vs. ACIT reported in 139 TTJ 48(Del), the Hon’ble Tribunal by following the judgment of Hon’ble Delhi High Court in the case of CIT Vs. NIIT Ltd. Reported in 318 ITR 289, held as under: “We may now examine the salient features of the Agreement with a view to decide it’s nature and intent. The assessee has been termed as “Licensor” and the operator of the study centre has been termed as “Licensee”. Although the assessee has placed emphasis on these terms, we are of the view that this is not material for deciding the issue at hand. What is material is the content of the agreement. According to the agreement, the assessee is to provide entire study materials, upgradation thereof, technical know-how and product details. The licensee is entitled to use trade mark and trade name of the assessee. The licensee is to set up the premises, equipments and infrastructure at its cost as per specifications provided by the assessee. The whole of the materials, trade name etc can be used by the licensee only for the purpose of running the study centre. The licensee is to collect various fees from the students. The taxes or duties leviable in present or in future are to be borne by the licensee. He is also liable to pay fees @ 25% of the net value earned from the operations. This means that 75% of the profit from the operation of the centre is to be retained by the licensee and 25% is to be handed over to the assessee. When we look to these terms,

ITA Nos. 1016 & 1017/JP/15 ACIT, (TDS), Jaipur vs. Gandhi Vidya Mandir, Churu it emerges that it is not a case where the licensee is doing any work. It is a case of running a study centre and to apportion profits thereof between the assessee and licensee.” Although the model of sharing receipts in the case of NIIT is somewhat different from instant case, it is clear that as in that case, “in this case also the agreement has to be read as a whole. If we do that, it becomes clear that the present agreement is not an agreement regarding payment to be made to the licensee for any work done on behalf of the assessee. Rather it is a case of sharing fees for carrying out respective obligations under the contract”[Emphasis supplied].

It is thus evident that it is a case of sharing of profits between assessee and authorize study centers for carrying out respective obligations under an arrangement and not a case of rendering of services by study centres to appellant and as such there is no obligation to deduct TDS under section 194C or under section 194J of the Act. The facts of the case of NIIT Ltd. (supra) decided by Hon’ble Delhi High 4.2 Court are that the assessee is engaged in the business of providing computer education and training. It provides computer education and training through its own centres and through franchisees, who are providing NIIT courses under a license from the assessee. Under the agreement, they bring together their resources for providing the education. The assessee provides relevant course- ware and its expertise. The franchisees provide infrastructure, like class rooms facilities, equipments, furniture, fixtures, administration set up etc. They also operate and manage the education centre on a day-to-day basis. They admit students, conduct classes and perform other administrative function in this behalf. The education centre is run under the brand name of the assessee. The fees from the students are deposited in the account of the assessee and thereafter shared with the franchisee in accordance with the term and condition of the license agreement. The fees shared by the assessee with the franchisee has been placed under different nomenclatures, i.e., marketing claim, infrastructure claim etc. the tribunal came to the conclusion that the agreement has to be read as whole and composite agreement like this cannot be broken into various components as contended by the revenue. Therefore,

ITA Nos. 1016 & 1017/JP/15 ACIT, (TDS), Jaipur vs. Gandhi Vidya Mandir, Churu the provision contained in section 194-I regarding tax deduction from rent of a building is not applicable in respect of the infrastructure claim. Although the model of sharing receipt in case of NIIT is somewhat different from the instant case, it is clear that as in that case, in this case also agreement has to be read as a whole. If we do that, it becomes clear that the present agreement regarding payment to be made to the licensee for any work done on behalf of the assessee. Rather it is a case of sharing of fees for carrying out respective obligation under the contract.” [Emphasis supplied] The aforesaid decision has been affirmed by the judgment of Hon’ble 4.3 Delhi High Court in the case of CIT vs. Career Launchers India Ltd. reported 358 ITR 179

4.4 The appellant submits that no technical knowledge has been made available to the appellant and therefore section 194J of the Act perse is inapplicable. Reliance is placed on the decision in the case of Jaipur Vidyut Vitran Nigam Ltd. vs. DCIT reported in 123 TTJ888 wherein it was inter-alia held as under

“An analysis of above cases lays down the proposition that s. 194J would have application only when the technology or technical knowledge of a person is made available to others and not where by using technical systems, services are rendered to others. Rendering of services by allowing use of technical system is different than charging fees for rendering technical services. The applicability of s. 194J would come into effect only when by making payment of fee for technical services”.

4.5 Payment made to stock exchange for providing infrastructure to their members is not in the nature of technical services to attract provisions of section 194J (Dy.CIT Vs. Angel Broking Ltd. (2010) 35 SOT 457 (Mum.).

4.6 Where a hospital engaged consulting doctors and provided them with consulting chambers with secretarial assistance and the fees collected from out-patients and paid to the consultants each day after deducting certain amount towards rent and secretarial assistance, it was not a case of payment of professional fee and neither section 192 nor section 194J was attracted and 10

ITA Nos. 1016 & 1017/JP/15 ACIT, (TDS), Jaipur vs. Gandhi Vidya Mandir, Churu the hospital cannot be treated as assessee in default for not deducting tax from such payments [Asstt. CIT vs. Indraprastha Medical Corp. Ltd. (2010) 35 DTR 353 (Del.)

4.7 It was submitted that payments made are not for provision of services is evident from the manner and mode of payments. It is a case of sharing of profits whereby 50% or 60%, as the case may be, of the course fee is paid to the study centres. There is no fixed sum payable or paid to the study centres for either maintaining the infrastructure or operating the infrastructure. On the contrary, the study centres are entitled to consideration only on receipt of fee from the study centres. Thus the fact that the study centres are entitled to variable and fluctuation consideration based on the fees received itself establish that it is not a case of provision of services by study centres to the appellant.

4.8 It was further submited that in all the study centres, it is the study centres who approached the university and not vice-versa. Thus in such circumstances, it cannot even be validly alleged that the service is being provided by study centres to the appellant, as it is commonly and well known fact in ordinary parlance that service recipient approaches the service provider which is not so in the instant case. Thus, even on this ground, the assumption of the learned Assessing Officer is highly unjustified and unsustainable. It is also submitted that service has been defined as “a valuable action, deed or effort performed to satisfy a need or to fulfill a demand. Service also means “delivering value to customers by facilitating outcomes customers want to achieve but without the ownership specific costs and risks” whereas in the instant case the cost and risks or outcomes are with the study centres. Reliance is placed on the judgment of CIT vs. Visisth Chay Vyapar Ltd. Reported in 339 ITR 157 (Del).

4.9 It was further submitted that in a recent judgment reported in (2014) 369 ITR 392 (Raj), the Hon’ble Rajasthan High Court-Jaipur Bench in the case of Commissioner of Income Tax (TDS) Vs. Samtel Glass Ltd. has stated that “It would be too much to stretch the plain and simple reading of technical services”. While dealing with the provisions of section 194J, the Hon’ble High

ITA Nos. 1016 & 1017/JP/15 ACIT, (TDS), Jaipur vs. Gandhi Vidya Mandir, Churu Court observed that “Section 194J read with explanation 2 to section 9(1)(vii) provides that the predominant purpose to fall in technical services should be consideration for the rendering of any managerial, technical or consultancy services whereas in the assessee’s case it was an agreement in between the two companies to sell/purchase gas and the intention of the parties was sale and purchase and it could not import any reasoning to hold that it could fall in the category of technical services. It would be too much to stretch the plain and simple reading of technical services.”

4.10 It was further submitted that the agreement to run and conduct business was to share profits and to arrive at the said conclusion dominant intention of the parties has to be considered. In case of Kamat Hotels (I) Ltd. Vs. ITO78 ITD 241 (Mum), it was observed that “in our view, the dominant intention of the parties to the agreements under consideration was to grant a conducting license to the assessee to manage and conduct the catering business and it was only incidental that the premises was allowed to be used by the assessee as a permissive user or under a license. When the substance of the agreements or the arrangements is this, the mere possibility of a part of the payment of royalty/commission being attributable to the use of the land or the building together with furniture and fittings does not, in our opinion, have the effect of converting what in substance and truth is an arrangement for conducting or managing the business into one for the mere use of the land or building together with furniture, fittings.”

4.11 Apart from the above the learned Assessing officer has relied upon the judgment in the case of CIT vs Kotak securities ltd reported in340 ITR 333 (Bom) and decision in the case of TUV Bayren (India) Ltd. Vs DCIT reported in 53 SOT 56 (Mum) which judgments also support the submission of the appellant that in absence of services section 194J of the Act cannot be invoked.

4.12 It was further submitted that the Hon’ble ITAT Jaipur Bench in case of ITO Vs. M/s. Rajasthan Knowledge Corporation Ltd vide its order dated 13.09.2015 held as under:

ITA Nos. 1016 & 1017/JP/15 ACIT, (TDS), Jaipur vs. Gandhi Vidya Mandir, Churu “The nature of internal distribution of revenue based on the mutual agreement cannot be held to be rendering of professional or technical services by any stretch of imagination. We find merit in the erudite contentions of the ld. Counsel for the assessee. Our view is reinforced by Hon’ble Delhi High Court judgement 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 taking the logic further these cannot be held as payments on account of rendering of any professional or technical services as contemplated by section 194J of the Act in view thereof we find no infirmity in the impugned orders of the learned CIT(A), which are upheld. In the result, all the three revenue’s appeals are dismissed.” 4.13 The appellant hastens to add here that no doubt assessee had deducted TDS u/s.194C of the Act but as explained and held by the Hon’ble Court above it is not a case where even section 194C of the Act is applicable. It is well settled law that there is no estopple against statute and thus erroneous deduction of TDS by the assessee u/s.194C of the Act cannot be a ground to assume that any service has been rendered by the study centres to the appellant. Reliance is placed on Kesoram Industries & Cotton Mills Ltd. vs. CIT59 ITR 767 (SC) and Mayank Poddar Vs CIT262 ITR 633 (Cal.) 4.14 It was further submitted that the said payments have been made consistently since more than ten years and no order has been made u/s.201(1)/201(1A) of the Act and as such on this ground along the order is vitiated. Reliance in support of the principle of consistency is placed on the following judgments: i) CIT vs. Excel Industries Ltd.358 ITR 295 (SC) ii) State of Andhra Pradesh Vs. A.P. Jaiswal (2001) 1 SCC 748 iii) CIT Vs. Berger paints 266 ITR 99 (SC) 4.15 It was further submitted that the appellant also derives supports from circular No.715 dated 8th August, 1995 wherein CBDT has held that the true content or intention must be gleaned on a proper construction of the arrangement. In such circumstances, it is submitted that the submission that dominant intention of the parties was to authorize the study centres to provide services to the students and share profit there from. There was no

ITA Nos. 1016 & 1017/JP/15 ACIT, (TDS), Jaipur vs. Gandhi Vidya Mandir, Churu intention to avail services from study centres. The various conditions in the norms and regulations only provide for restriction and control for the authorization. It is thus submitted that applying the dominant test it has to be held that there was no services provided by the study centres to the appellant. 4.16 Without prejudice to the aforesaid submission, it was submitted that, the learned Assessing Officer has failed to appreciate that since all the study centres were assessed to tax and had duly declared such receipts as their income there was no justification even otherwise to hold that the assessee was in default under section 201(1) of the Act. In view of the circular No.275/201/95 IT (B) dated 29.01.1997 of the Central Board of Direct Taxes and judgement of the Hon’ble Apex Court in the case of Hindustan Coca Cola Beverage (P) Ltd. Vs. CIT reported in 293 ITR 226 5. In order to appreciate the rival contentions and more particularly, the true nature and dominant object of the arrangement between the assessee and the respective study centres, it would be relevant to go through the norms and procedures/ guidelines for setting up the Study Centres and conducting IASE University programmes through such Study Centers which are reproduced as under: 1. After the application is received for grant of authorization to their study centre by the University, the University shall satisfy themselves of the bonafide of its applicant society/trust/corporate and its office-bearers, and make sure that no criminal proceeding(s) is/are pending or contemplated against any of its office bearers. 2. The applicant has sufficient infrastructural facilities such as proper building class rooms, library, laboratory, and also qualified teaching faculty, a know-to-all concerned e-mail id of the centre, internet connection, telephone, fax, teaching audio-visual aids, student support cell including placement cell etc. with regards to the course(s) applied for, as per the requirements of the University. Such application should also be accompanied by photographs and CD(s) showing in details of all infrastructures like class rooms, library, laboratories etc. On inspection by the team appointed for the purpose by the University, if any discrepancy(ies) is/are noticed, it will be construed as a misrepresentation of actual facts resulting in rejection of application summarily and forfeiture of inspection-cum-processing fee.

ITA Nos. 1016 & 1017/JP/15 ACIT, (TDS), Jaipur vs. Gandhi Vidya Mandir, Churu 3. The maximum number of students allowed for enrolment shall depend on the size of building, infra-structural and institutional facilities of the study centre. If the number of candidates is more than the infrastructure available, then the Study Centre must create or arrange, additional infrastructure, lab, workshops library and other facilities mandatory for the course as per the ratio of the students to the entire satisfaction of the University. The excess candidates will be transferred to the nearest authorized Study Centre of IASE.

ITA Nos. 1016 & 1017/JP/15 ACIT, (TDS), Jaipur vs. Gandhi Vidya Mandir, Churu director or other officials of the centre. The decision of the University in this regard shall be final and binding. 12. Properly established administrative office, student support system including audio visual training aids and public utilities/services/convenience. a) Adequate basic facilities like generator/computers, drinking water, fans, lights, parking place, toilets, security etc. b) Contact classes, theory as well as practicals, as per syllabus. c) Class-wise and teacher-wise time table d) Placement support to the Students e) A known to all: centre’s e-mail id and the contact person, Internet connection, Telephone and fax numbers f) Any other such facility that may be required for providing satisfactory quality education and/or made mandatory under UGC/DEC rules and guidelines. ADMINISTRATIVE SET-UP: 13. The study centre should have Incharge/ Co-ordinator/ Controller and at least two full time senior permanent faculty members for each programme, having requisite qualifications. Others may be qualified visiting or part-time faculty or subject specialist as per the programmes conducted at the centre. 14. The study centre must have 3 or more non-teaching staff on permanent basis. The centre must also appoint lab assistants and support staff or junior faculty members for each programme. 15. Complete service record of the faculty and other relevant information should be available at the centre and faculty should be available for interaction, to the visiting/inspecting team when called upon at a short notice. 16. Similarly, a list of authorized signatories of the Study Centre, duly authorized by the Director of the Study centre, must be made available in writing to the University for all academic, legal, administrative and other such purposes, correspondence etc. and should be available for interaction, to the visiting/inspecting team when called upon at a short notice. RECORDS: 17. The study centre should necessarily maintain the following records in its premises and produce the same on demand to the University whenever required: a) Attendance record of students at various levels b) Sessional and practical works; assessment report of each student c) Visitors’ book

ITA Nos. 1016 & 1017/JP/15 ACIT, (TDS), Jaipur vs. Gandhi Vidya Mandir, Churu d) Receipt of payments received from and to the students and / or the University e) Complete details of the study material received from the University and/or its representatives and details of study material issued to the students subject wise and student wise. They are also required to keep a set of master copy of the latest Study material and Syllabus. f) Details of the documents received from the University and/or its nodal centres and their issue to the students concerned (Mark sheets/Certificates/NOC/Degree/Exam Schedules/Training/Practical Schedules/ Admit Cards/Hall Tickets/Enrolment Nos./any other relevant documents meant for distribution). g) Official documents received, in chronological order, from University and/or statutory bodies such as UGC/DEC/Education boards/State Govt. etc. h) Relevant correspondence and applications (along with the replies given to them) from students/their parents/bodies/groups. i) Self Assessment Forms (with updated assets list) and Yearly improvement plan and their implementation status (quarterly updated). j) Complete details of academic activities such as conduct of contact classes, practical classes, guest lectures etc. Attendance register of students who are being provided contact classes (theory & practical) should also be separately maintained. k) Authenticated and authorized letters of tie ups, if any, with the colleges/ labs/ faculty etc for relevant academic activities l) Placement database which shall necessarily include: i) the records of persons/institutes/factories/organizations and/or any other such employment providers contacted ii) Successful employments iii) Successful placement for trainings m) Any other relevant record asked by the University 18. That on receipt of application, together, with the requisite inspection-cum- processing fee, shall be inspected by a team appointed by the University. On receipt of the report of inspection team, deficiency (ies), if any, indicated in the report shall be communicated to the applicant. If the proposed centre removes the deficiency(ies) within the stipulated time and submits evidence duly supplemented by more photographs and CD, to the satisfaction of the University, and accompanied by a further inspection fee of Rs.10000/- or the amount as may be amended and deemed applicable at that time, the University may consider re-inspection of the said centre.

ITA Nos. 1016 & 1017/JP/15 ACIT, (TDS), Jaipur vs. Gandhi Vidya Mandir, Churu 19. That after receiving the re-inspection fee as mentioned above, the centre shall be inspected again by a team of persons, and if the deficiencies indicated in the previous inspection report are found to have been removed the proposal for an authorization letter will be considered and may be issued for a period not exceeding one year. 20. Notwithstanding any clause indicated hereinbefore the event of rejection/ withdrawal of the request made by the applicant after issuance of authorization, it will have no claim for refund of the deposits made to the University. If the deficiencies are not removed in part or in full thereof, the application shall be rejected finally and no fee shall be refunded. The Study Centre will ensure that until and unless a centre is finally authorized by the University, the centre does not admit/enroll any student for any course(s) approved by the University. The centre will not be permitted to admit students without having prior written approval/authorization from the University. 21. The Study Centre, once authorized by the University, does not have the power to sublet, underlet the programmes of IASE under any terms and conditions or part thereof to any other Study Centre under any circumstances. 22. As per the IASE University’s rules, the centre can neither be transferred nor sold/leased/sublet from one body to the other. 23. That, if any study centre admits students in the name of IASE University in any course(s) not duly authorized/approved by the University, it will be treated as malpractice and breach of trust, on the part of study centre of University, resulting in cancellation of authorization and rejection of all such forms of the students. However, an opportunity will be provided to the centre for explaining the situation, in writing. Authorization/Additional Authorization: 24. There should be no other authorized centre of IASE within a radius of 3 km in cities and 5 km in towns.

Registration/Authorization Fee for the approval of the Study Centre for one stream is Rs.70,000/- or as applicable from time to time, (refundable in case the centre is not approved after inspection).

Processing cum Inspection fee is Rs.15000/- or as applicable from time to time (non-refundable and non-adjustable) should be enclosed with the Self Assessment Form. Therefore a DD of Rs.85000/- should be enclosed with the Self Assessment Form if applying afresh for authorization of one stream.

ITA Nos. 1016 & 1017/JP/15 ACIT, (TDS), Jaipur vs. Gandhi Vidya Mandir, Churu In case additional stream is required a separate DD of Rs.20,000/- for each additional stream must be enclosed apart from Rs.85,000/- for authorization of additional stream. However at later stage the same process of authorization of additional stream will be repeated for obtaining a DD worth of Rs.20,000/- + 10,000/- as inspection fee. Only after the authorization/additional authorization the centre shall be permitted to run/conduct the approved programmes. No centre is permitted to admit students without obtaining prior approval of the University. The Study centre shall enroll students only on receipt of the authorization letter from the University and that too, only for the stream(s) allowed therein. The Centre shall be inspected by a team (appointed by the University). 25. That, on submission of inspection report by the inspection team duly appointed by the University, and on its satisfaction, may proceed for issuance of an authorization/ approval letter for one or more stream/streams. The minimum duration of the authorization would be for 1 year which may be extended further upto 3 years subject to the satisfactory performance of the Study centre and compliance of the University’s Study Centre Norms and Parameters based on the evaluation/assessment/inspection reports received by the University. This grant of extension shall be at the sole discretion of the University. 26. The Study Centre must work with utmost sincerity, honesty and integrity and will endeavour to ensure delivery of qualitative education with the help of suitable infrastructure and latest technology. 27. Information uploaded on the website shall be deemed informed and applicable to all concerned. The study centres must follow the norms, procedures and parameters of the University at all times which may be amended by the University, with or without notice. 28. The study center shall be considered for authorization provided they fulfill all the norms and procedures of the University and shall also ensure minimum student strength of 50 students/stream/center/semester. 29. The authorization for the stream in which the intake has been less than 50 for two consecutive semesters shall be automatically withdrawn. The centre shall not be permitted to take any new admissions in any of the streams, thereafter, unless permitted by the University. 30. No admissions of the Study centre shall be entertained from the date of a show cause notice issued to the centre on account of breach of any of the norms and parameters of the University. In case of an explanation to the show cause notice is turned down as unsatisfactory by the competent authorities all your existing students shall be transferred to the nearest authorized centre of the University.

ITA Nos. 1016 & 1017/JP/15 ACIT, (TDS), Jaipur vs. Gandhi Vidya Mandir, Churu 31. Any centre can be inspected/visited at anytime, for a routine or surprise inspection, with or without notice, by a competent authority/statutory body/Team of IASE, UGC, DEC or by any other authorized representative of the University in order to verify the proper functioning of the Study centre and/or to ascertain compliance of all the University’s Study Centre Norms and Parameters failing which the authorization to be granted or already granted would be revoked. ADVERTISEMENT: 39. That all advertisements released for publication by the Study Centre should invariably be got approved in writing from the University specifying the purpose. This shall be based on the publicity/communication guidelines of the University. Approval sought shall not be unreasonably withheld. Where an advertisement has been approved by the University and the Study Centre wishes to use the same Advertisement, provided it is exactly for the same purpose for which it was approved earlier, the Study Centre need not take the approval of the University in such cases. This original advertisement approved shall be taken as a master approval. PROSPECTUS: 40. The application Form(s) towards fresh admission, re-registrations, provisional and due forms shall be printed by the University. STUDY MATERIAL: 41. The study material shall be supplied by ther University/Nodal Centre/ Study Centre to the student within 7 days of his/her successful enrolment in the University. COURSE FEE ETC. 42. That the course fee, examination fee, enrollment & verification fee and any other fee for the various programs shall be fixed by the University which could be amended from time to time and shall be binding and deemed applicable on all the study centres of University. The Study Centre shall ensure that the relevant course fee and all other applicable fee, is deposited in full with the University. 43. The University shall have the right to revise all or any of the fees from time to time which shall invariably apply to all students from the beginning of the academic year/session, irrespective of students paying a lower rate of fee on account of having been enrolled in previous year(s) and continuing their course of studies. 20

ITA Nos. 1016 & 1017/JP/15 ACIT, (TDS), Jaipur vs. Gandhi Vidya Mandir, Churu 44. A sum of 50% of the course fee will be paid to the Centre subject to the satisfactory support services provided by the centre to the student in terms of library, labs, practical and theory classes, training etc. 45. Upon receipt of information from the University, the study centre must forward all information to the students within 7 days of its date of dispatch from the University which could be regarding dates of examination/results/names of the examination centres, hall tickets, eligibility, admissions, enrolment, study material, discrepancies in the application forms, closure of the centre, transfer of students, refunds (if any) etc.. The study centre is also responsible to distribute the mark cards, admit cards, enrolment certificates of the students sent by the University within 4 days of the date of dispatch from the University and maintaining the delivery records and receipts. Holding back any documents/information of the University, meant to be passed on/to the students and charging any extra fees on these pretexts will lead to strict action by the University towards the study centre. The University will be primarily responsible to ensure this. 46. That the University shall issue necessary marks sheet and final Degree/Diploma/Certificates to those students only who: a) Complete their courses successfully as per the norms of the University, b) Fulfill all the norms and procedures of the University, and; c) Have no dues pending against their name. The Study Centre shall maintain its complete record and produce to the University party on demand for verification and other relevant purposes. 47. The Study Centre will deposit the requisite fee/charges etc. in advance without which the application forms of the students, if already submitted, will be rejected summarily, treating the same as having received without fee or in-sufficient fee. ADVICE & GUIDANCE BY UNIVERSITY: 48. The University shall provide necessary administrative and/or technical advice and guidance and always encourage its study centres to impart quality education and keep improving the infrastructural facilities all the time. The University shall maintain a track record of this through inspections and Self Assessment Forms to be provided by the Study Centre at the time of renewal of authorizations. 49. The Study Centre will be solely responsible for following strictly the course curriculum of IASE and shall provide the students the required number of hours of contact program, conduct theory classes, practicals and counseling in each Semester/year. It shall also provide all the facilities such as qualified

ITA Nos. 1016 & 1017/JP/15 ACIT, (TDS), Jaipur vs. Gandhi Vidya Mandir, Churu faculties, Library, Laboratory and other infrastructure, in conformity with the course(s) being run, besides providing basic amenities to the students. MISCELLANEOUS: 50. The Study Centre will be solely responsible for all the financial liabilities such as salaries of its employees, cost of additional infrastructure and its maintenance, and repayment of loans etc. IASE will not be responsible for any financial liability of the centre whether previous, present, or future. The Study Centre will not make any financial commitments on behalf of IASE University. 51. Study Centre will be responsible for sale of prospectus, collection of admission/re-registration forms, along with individual demand drafts of the 100% fees, other applicable fees and costs as specified in the latest prospectus (no cash will be accepted). The Study Centre will deposit the same with the University within the stipulated dates specified by the University along with all forms and eligibility/ relevant documents. All payments, including the cost of the prospectus etc., will have to be deposited with the University in advance. 52. All admission forms/re-registration forms/due paper forms must be forwarded to the University after being duly signed by the Centre Coordinator with its office stamp. The Study centre will verify all the eligibility certificates of the students with the originals and submit the self attested and duly notarized photocopies of each certificate/document along with the forms. The University has the right to reject any admission form in case of non-eligibility/incomplete form in any respect, or without assigning any reasons thereof. However, the acknowledgement of receipt of application form, along with the requisite fee, is not an acceptance, as such, or grant of admission, because that is based strictly on the outcome of the verification of documents and fulfilling the eligibility conditions. 53. The Study Centre will be responsible to abide by all State Government/Central Government/other statutory bodies rules and guidelines, as applicable from time to time. If there is any failure, Study Centre will be solely and totally responsible for its consequences thereof. 54. In case the Study Centre is found indulged into defaming/misrepresenting the University/misinterpreting the facts/activities competitive in nature/illegal/ or in any other such activities that shall adversely affect/be detrimental or harmful to the goodwill/ status of the University, latent or overt, the University Study Centre shall take necessary stringent/legal action(s)as deemed fit including the termination of the agreement with immediate effect. Or as deemed fit, the University may seek from the study

ITA Nos. 1016 & 1017/JP/15 ACIT, (TDS), Jaipur vs. Gandhi Vidya Mandir, Churu centre; vide a show cause notice, to explain its position within 15 days of date of dispatch of such notice. The written explanation/statement by the Co-ordinator/Director of the study centre, in reply to the said notice, must reach the University within the stipulated time, failing which the centre is deemed to have accepted involved in working against the University and is, therefore, liable for the cancellation of its authorization and compensate the University for all the losses, latent or overt, as claimed by the University. The Study Centre shall indemnify the University from any of the consequences arising thereof. 55. The Study Centre must ensure full support, guidance, counseling etc in conducting the contact classes. In case candidates are not satisfied with the services and support provided by the study centre, they can be transferred to any other centre, at the beginning of the subsequent Semester/year and a transfer fee of Rs.500/- per candidate shall have to be paid by the transferee centre to the University. 56. In case of a complaint made by the candidates/parents/other bodies, the University may seek clarification from the centre. If not satisfied, University will conduct the investigation at the cost of the centre and take suitable action, if found true, against the Study Centre. 57. All payments will be made only in the form of Demand Draft favoring in the name of Registrar IASE University, A/c Centre Code…….., payable at Sardarshahar/Delhi. Any instrument payable at other than these cities will be charged Rs.1000/- per instrument and debited to the University’s account. IASE University will not be responsible for any cash transaction whether by the student or by the centre made to the University in any other manner. 58. In the event of non-fulfillment of the contact, terms and conditions, due to unforeseen circumstances, the University shall not be held responsible for any loss or consequential issues. 59. The University shall not be liable for any suit for damages or for any infringement of copyright of the SIM or any other breach of the IPR made by the Study Centre. The Study Centre shall underwrite that the University shall not be responsible for any loss suffered out of this. 60. All correspondence should be marked clearly to the Registrar of the University only. The University does not take responsibility for any postal delays or loss or documents in transit and the consequences thereof. 61. The centre is responsible for conducting regular classes and continuous evaluations which is done through assignment, practical and viva. The evaluation sheet shall be forwarded to the University in the prescribed format in hard and /or soft copies, retaining a set of the whole record with

ITA Nos. 1016 & 1017/JP/15 ACIT, (TDS), Jaipur vs. Gandhi Vidya Mandir, Churu itself. In case the classes, theory or practicals, are outsourced (tie-up) the evaluation assessment shall be forwarded by them to the study centre who in turn will forward it to the University. 62. Copies of the test papers, assignments, projects and other original documents of the students scoring more than 70% in internal assessments will have to be provided to the University.

ITA Nos. 1016 & 1017/JP/15 ACIT, (TDS), Jaipur vs. Gandhi Vidya Mandir, Churu lead centres (DLCs) on which the company is deducting tax at source. On verification of the records, it came to the notice of the Assessing Officer that the respondent-RKCL is not deducting tax at source on the amount of Rs.1,450/- paid to IT Gyan Kendras by it for each student and noticing certain irregularities in non-deduction of tax at source, a show-cause notice was issued and the respondent-RKCL was directed to clarify the situation as to why the tax was not being deducted at source. According to the Assessing Officer, the assessee was liable to deduct tax at source on the said amount. In the context of above facts, the Hon’ble Rajasthan High Court has given its findings and held as under:

“(6) We have considered the arguments advanced by learned counsel for the Revenue, we have already noticed that the respondent was promoted by the State of Rajasthan to impart computer education program for the benefit of students and their own staff. We have also noticed earlier the amount to be shared by the three entities. It may be appropriate to mention that in so far as payment of Rs.850/- is concerned, tax was being deducted at source and the only dispute raised by the Revenue was on account of Rs.1,450/- which was being paid to ITGKs by the respondent. Admittedly, the amount has been shared by the respondent amongst various agencies referred to herein above. Both the appellate authorities have taken into consideration the agreement entered by and between the parties/stakeholders and the dominant intention of the parties was to conduct the business of providing specific e-learning courses in the State of Rajasthan and share the revenue generated by way of fees received from the learners. Admittedly, in the revenue sharing model, the entry fees (course fee/exam fee), collected from the learners have been received by the respondent, which in turn redistributed it to be shared with the ITGKs and VMOU as per the agreement. For instance, the aggregate revenue of 25

ITA Nos. 1016 & 1017/JP/15 ACIT, (TDS), Jaipur vs. Gandhi Vidya Mandir, Churu Rs.2,300/- for RS-CIT course, which is received by the ITGK from the learner, is transferred to the respondent which is shared among the three stakeholders. In our view, the transaction between the ITGK and RKCL and VMOU are not of a service provider or service receiver. The relation between these stakeholders is one of collaborators as per the agreement made and the revenue shared cannot be said to be payments for technical services rendered by ITGKs and VMOU to RKCL as held by the Assessing Officer.”

ITA Nos. 1016 & 1017/JP/15 ACIT, (TDS), Jaipur vs. Gandhi Vidya Mandir, Churu verification fees, etc for the various study programme shall be fixed by the University and shall be binding on all the study centres. The study centres will be responsible for collecting all the fees from the students and depositing the same in full with the University. Out of the fees so collected, a sum of 50% of the course fees will be paid by the University to the study centres subject to the satisfactory supports services provided by the centres to the students in terms of library, labs, practical and theory classes, and training etc. On review of the above arrangements entered into between the IASE University and the various study centres, it is clear that the dominant intention of such arrangements is to provide quality education through distance learning of various IASE structured study programmes and to share the revenues generated by way of course fees and other related fees collected from the students. The arrangements defines the mutual rights, duties and obligation of the IASE University and the respective study centres and on a proper construction of such arrangements, it is clear that true intention or the dominant intention is to provide quality education to the students and the arrangements between the IASE university and the study centres are in the nature of business arrangements wherein sharing of profit in terms of course fees and other fees collected from the students has been emphasised and mutually agreed upon. It is not an arrangement for rendering of any services by the study centre to the university rather the services, if at all, has been rendered is to the students who have enrolled for the various courses.

ITA Nos. 1016 & 1017/JP/15 ACIT, (TDS), Jaipur vs. Gandhi Vidya Mandir, Churu Career Launcher Ltd. holding that “ the facts, as noticed earlier in the instant case, are also identical except that in the present case, the Assessing Officer has invoked provisions of section 194J whereas in the cases before the Delhi High Court, one related to the provisions of section 194-I (CIT v. NIIT Ltd.) and in another case (CIT v. Career Launcher India Ltd.) it was provisions of section 194C but by and large in all the three cases including the instant matter, the dominant purpose is to share the fee based on the agreements between the parties.” Therefore, in light of above, the contention of the Revenue that the facts in the instant case and that of Career Launcher are different is not acceptable.

ITA Nos. 1016 & 1017/JP/15 ACIT, (TDS), Jaipur vs. Gandhi Vidya Mandir, Churu the study centres are in the nature of revenue sharing business arrangements and the same cannot be held in the nature of provisions of technical services by the study centres to the University hence the provisions of section 194J are not applicable in the instant case. We accordingly confirm the order of Ld. CIT(A) and dismiss the ground taken by the Revenue in both the years.

In the result, the appeals filed by Revenue for both the years are dismissed.

Order pronounced in the open court on 31/01/2017.

Sd/- Sd/- (KUL BHARAT) (VIKRAM SINGH YADAV) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member

Jaipur Dated:- 31/01/2017

Pillai आदेश की प्रतिलिपि अग्रेषित@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant- The ACIT(TDS), Jaipur 2. izR;FkhZ@ The Respondent- M/s Gandhi Vidhya Mandir, Churu vk;dj vk;qDr@ CIT–III, Jaipur 3. vk;dj vk;qDr¼vihy½@The CIT(A)-III, Jaipur 4. 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 6. xkMZ QkbZy@ Guard File (ITA No.1016 & 1017 /JP/2015)

vkns'kkuqlkj@ By order, सहायक पंजीकार@ Aेेपेजंदज. त्महपेजतंत.