Payment made for conduct of examination through affiliated centers and TDS U/s 194J

Payment made for conduct of examination through affiliated centers and TDS U/s 194J

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Payment made for conduct of examination through affiliated centers and TDS U/s 194J

Short Overview:

In absence of any material to establish that the affiliated colleges were rendering services of professional or technical nature in the matter of conducting the University’s examination, there was no liability to deduct tax at source on such reimbursement under section 194J.

Assessee-University conducted examination through various colleges affiliated to it. In the process, affiliated colleges incurred various types of expenditure both administrative and procedural and assessee made reimbursement of said expenditure. AO created the demand on account of non-deduction of tax under section 194J on the ground that such services were in respect of professional or technical expertise.

It is heald that, No doubt, the payment of expenditure incurred by affiliated colleges was reimbursable but there was no involvement of professional or technical expertise. Thus, in absence of any material to establish that the affiliated colleges were rendering services of professional or technical nature in the matter of conducting the University’s examination, there was no liability to deduct tax at source on such reimbursement under section 194J.

Decision: In assessee’s fvaour.

IN THE ALLAHABAD HIGH COURT

PANKAJ MITHAL & PANKAJ BHATIA, JJ.

Pr. CIT v. M.P. Biscuits (P) Ltd.

Income Tax Appeal No. 82 of 2018

5 December, 2018

Appellant by: Praveen Kumar

Respondent by: Ashish Bansal

ORDER

Filing of the certified copy of the impugned order of the Tribunal is exempted as the same has already been annexed in Income Tax Appeal No. 147 of 2018Exemption Application No. 1 of 2018 is allowed.

Heard Sri Shubham Agrwal, learned counsel for the appellant, Income Tax Department.

The appellant has preferred this appeal against the judgment and order dated 3-8-2018 of the Income Tax Appellate Tribunal Lucknow Bench.

The facts of the case reveal that the Assessee-University conducts examinations through various colleges affiliated to it. The affiliated colleges function as the examination centre. These affiliated colleges/centres in holding the examinations incur various types of expenditure both administrative and procedural. The Assessee-University reimburse these expenses to the affiliated colleges/centres.

In the assessment years 2009-10 the assessing officer created the demand of Rs. 55,49,456 on account of non-deduction of tax under section 194J of the Income Tax Act, 1961 (hereinafter referred to as the Act). The appeal of the Assessee-University was dismissed by the Commissioner (Appeal) whereupon further appeal was preferred to the Tribunal which has been allowed.

The assessing officer as well as the Appellate Authority has held that the amount so reimbursed by the Assessee-University to the affiliated colleges are in respect services of professional or technical experties which are covered under section 194J of the Act.

The Tribunal in considering the matter held that no doubt the payment of expenditure incurred by the affiliated colleges/centres is reimbursable but there is no involvement of professional or technical experties. The affiliated colleges/centres do not render any technical services in conducting of the examination. The Tribunal further observed that the revenue in the past and in the subsequent years has never raised such an objection.

Thus, in the absence of any material to establish that the affiliated colleges/centres were rendering services of professional or technical nature in the matter of conducting the University’s examination, we are of the opinion that the Tribunal has not committed any error of law in holding that the tax was not deductable on such reimbursement under section 194J(b) of the Act.

In view of the aforesaid facts and circumstances, we are of the opinion that no substantial question of law arises in this appeal worth consideration by this court.

The Appeal as such is devoid of merit and is dismissed.

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